E9-23 (Static) Computing the Issue Price of a Bond with Analysis of Net Earnings and Cash Flow Effects LO9-3, 9-8 Imal Company issued a $1 million bond that matures in five years. The bond has a 9 percent coupon rate. When the bond was issued. the market interest rate was 8 percent. The bond pays interest twice per year, on June 30 and December 31. Use Table 8C1. Table Required: 1. Record the issuance of the bond on June 30. (Round time value factor to 4 decimal places. Enter your answer in dollars not in millions. Round intermediate and final answers to the nearest whole dollar. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet < 1 Record the issuance of bond on June 30th. Note: Enter debits before credits. Date Jun 30 Record entry General Journal Clear entry O Discount Premium Debit 2. Was the bond issued at a discount or at a premium? Credit View general journal >

E9-23 (Static) Computing the Issue Price of a Bond with Analysis of Net Earnings and Cash Flow Effects LO9-3, 9-8 Imal Company issued a $1 million bond that matures in five years. The bond has a 9 percent coupon rate. When the bond was issued. the market interest rate was 8 percent. The bond pays interest twice per year, on June 30 and December 31. Use Table 8C1. Table Required: 1. Record the issuance of the bond on June 30. (Round time value factor to 4 decimal places. Enter your answer in dollars not in millions. Round intermediate and final answers to the nearest whole dollar. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet < 1 Record the issuance of bond on June 30th. Note: Enter debits before credits. Date Jun 30 Record entry General Journal Clear entry O Discount Premium Debit 2. Was the bond issued at a discount or at a premium? Credit View general journal >

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following table gives the prices of bonds Bond Principal ($) Time to maturity Annual coupon ($) Bond Price ($) 100 (years) 0.5 100 1 100 100 1.5 2 The bonds provide coupon are semiannual coupon bond a. Calculate 6-month, 12-month, 18-month and 24-month zero rates. 1567 0 98 100 100 101 b. What is the forward rate for the six-month period beginning in 12 months. c. Estimate the price of a two-year bond providing annual coupon of 7% annually.
Review the Bond Table below, all bonds have semi-annual payments. Security Coupon Rate Face Value Price 1-yr Treasury 0.00% $1,000 $965.90 5-yr Treasury 4.50% $1,000 $ 991.18 10 yr Treasury 5.00% $1,000 $ 976.94 5 yr Corporate 4.80% $1,000 $ 912.46 ( rated A) 10-year Corporate 8.40% $1,000 $1,044.66 (rated BBB) What price should you pay for a Corporate Bond with semi-annual payments, a 5 year maturity, a Default Rating of BBB, a Face Value of $1,000 and a coupon rate of 7.20%?
5 On January 1, Ruiz Company issued bonds as follows: Face Value: Number of Years: Stated Interest Rate: Interest payments per year 7 B 9 0 1 2 AWN IC $500,000 a) Required: 1) Calculate the bond selling price given the two market interest rates below. Use formulas that reference data from this worksheet and from the appropriate future or present value tables (found by clicking the tabs at the botto this worksheet). Note: Rounding is not required. 15 7% 2 Annual Market Rate Semiannual Interest Payment: PV of Face Value: +PV of Interest Payments: Bond Selling Price: Annual Market Rate Semiannual Interest Payment: PV of Face Value: +PV of Interest Payments: = Bond Selling Price: 9% $17,500 133,500.01 285,055.55 418,555.56 6.00% $17,500 205,993.38 5343,007.72 $549,001.10 +
Related to Checkpoint 9.2) (Yield to maturity) The Saleemi Corporation's $1,000 bonds pay 8 percent interest annually and have 15 years until maturity. You can purchase the bond for $1,075. a. What is the yield to maturity on this bond? b. Should you purchase the bond if the yield to maturity on a comparable-risk bond is 6 percent? Question content area bottom Part 1 a. The yield to maturity on the Saleemi bonds is enter your response here%. (Round to two decimal places.) Part 2 b. You ▼ should should not purchase the bonds because your yield to maturity on the Saleemi bonds is ▼ greater less than the one on a comparable risk bond. (Select from the drop-down menus.)
Spreadsheet Problem: Bond Ratings and Interest Rate Changes Say that in June of this year, a company issued bonds that are scheduled to mature three years from now in June. The coupon rate is 5.75 percent and is paid semiannually. The bond issue was rated AAA. (LG7-7) a. Build a spreadsheet that shows how much money the firm pays for each interest rate payment and when those payments will occur if the bond issue sells 50,000 bonds. b. If the bond issue rating would have been BBB, then the coupon rate would have been 6.30 percent. Show the interest payments with this rating. Explain why bond ratings are important to firms issuing capital debt. c. Consider that interest rates in the economy increased in the first half of this year. If the firm would have issued the bonds in January of this year, then the coupon rate would have only been 5.40 percent. How much extra money per year is the firm paying because it issued the bonds in June instead of January?
On January 1, year 1, ABC. Corp. issued bonds as follows: USE THIS FORMULA PLEASE: bond price = PV Factor x Face Value + Face Value x Stated Interest rate x PV Annuity factor Face value $3000000 Stated (or coupon) annual rate of interest 6 % Coupon is paid twice annually. Market annual rate of interest 8 % Term in years 3 How much did the bond sell for? Round your answer to the nearest dollar.
Calculate the accrued interest (in $) and the total proceeds (in $) of the bond sale. (Round your answers to the nearest cent.) Time Coupon Market Accrued Commission Bonds Total Company Since Last Rate Price Interest per Bond Sold Proceeds Interest Company 3 6.55% 91.50 21 days $ 0.34 $9.00 10 $ 828.40
Please find 1) Interest expense 2) cash paid 3) bonds payable Required information P10-6 (Algo) Recording and Reporting Bonds Issued at a Discount LO10-4 [The following information applies to the questions displayed below.] PowerTap Utilities is planning to issue bonds with a face value of $2,100,000 and a coupon rate of 9 percent. The bonds mature in 10 years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. PowerTap uses the effective-interest amortization method. Assume an annual market rate of interest of 10 percent. (FV of $1, PV of $1. FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.) P10-6 Part 1 Required: 1. What was the issue price on January 1 of this year? (Round your final answers to nearest whole dollar amount.) Issue price $ 2,100,000
Calculate the accrued interest (in $) and the total proceeds (in $) of the bond sale. (Round your answers to the nearest cent.) Time Coupon Rate Market Accrued Commission Bonds Total Company Since Last Price Interest per Bond Sold Proceeds Interest Company 3 6.55% 91.50 21 days $ 3.82 $9.00 10 $ 29,849.70 X
B. Complete the information below using Bonds. Redemption Value (F) Conversion per year (m) Bimonthly Coupon Payments (k) Bond Rate (r) 11. 18% P7.50 P680 Quarterly 11% 12. P900 Quarterly 12.8% 13. P1,300 Bimonthly 12% 14. 15. Annually 15% P105.00
P.nil Calculate the accrued interest (in $) and the total purchase price (in $) of the bond purchase. (Round your answers to the nearest cent.) Company Coupon Rate Market Price Time Since Last Interest Accrued Interest Commission per bond Bonds Pur. Total Price Company 2 9.7 79.75 23 days ? $9.95 15 ?
A. Table below is information about three USD10000 par value bonds, each of which pays coupon semiannually. The required rate of return on each bond is 14%. Calculate the value of the bonds and determine whether the bond is selling at discount, premium or par value. Bond Coupon Rate (%) Maturity (years) 1 8 5 2 14 10 3 16 15 B. Using the Interpolation Method to calculate the YTM for the below Bonds: > The par value USD18000 > Coupon Rate 10% every year > Maturity period 10 years > Market Value of bond USD21800