ABC Corporation issued P1,000,000 in 8% bonds, maturing in ten years and paying interest semi-annually. The bonds were issued at face value. What can you assume about the interest rates at the time the bonds were issued? a. The market rate for this bond was about 8%. b. The nominal rate of interest was about 8%. c. The coupon rate on the bond includes no premium for credit risk. d. The risk-free interest rate is about 6%.
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- Krystian Inc. issued 12-year bonds with a face value of $110,000 and a stated rate of 5% when the market rate was 7%. Interest was paid semi-annually. A. Calculate the cash flows the purchaser of the bonds (the investor) will receive throughout the bond term. NOTE: The requirement is referring to total interest and principal. X B. Would an investor be willing to pay more or less than face value for this bond? Less thanKrystian Inc. issued 12-year bonds with a face value of $110,000 and a stated rate of 5% when the market rate was 7%. Interest was paid semi-annually. A. Calculate the cash flows the purchaser of the bonds (the investor) will receive throughout the bond term. NOTE: The requirement is referring to total interest and principal. B. Would an investor be willing to pay more or less than face value for this bond? Less thanJava Co. issued 15-year bonds with a maturity value of $600 million. Which of the following statements is true if the bonds were issued at their par value? Select one: Select one: a. The effective or yield rate of interest exceeded the coupon rate. b. The cash rate of interest exceeded the coupon rate. c. The effective or yield rate of interest was less than the coupon rate. d. The effective or yield rate of interest was equal to the coupon rate.
- On July 1, Somers Inc. issued $300,000 of 12%, 10-year bonds when the market rate was 14%. The bonds paid interest semi-annually. A. Assuming the bonds sold at 59.55, what was the selling price of the bonds? $ B. Explain why the cash received from selling this bond is different from the $300,000 face value of the bond. Investors can earn a higher rate/lower rate? in other similar bonds so the bond sells at a Premium/discount?Reynolds Co. Issued $54 million face amount of 5.25% bonds when market interest rates were 4.97% for bonds of similar risk and other characteristics. Required: a. How much Interest will be paid annually on these bonds? (Enter your answer in dollars, not millions of dollars.) b. Were the bonds issued at a premium or discount? c. Will the annual Interest expense on these bonds be more than, equal to, or less than the amount of Interest paid each year? a. Annual interest payment b. Bonds issued C. Annual interest expense will beReynolds Co. ISsued $87 million face amount of 11.00% bonds when market interest rates were 10.90% for bonds of similar risk and other characteristics. Required: 0. How much interest will be paid annually on these bonds? (Enter your answer In dollars, not milons of dollars.) b. Were the bonds issued at a premium or discount? c. Will the annual Interest expense on these bonds be more than, equal to, or less than the amount of interest paid each year? a Annual interest payment b. Bonds issued C. Annual interest expense will be
- On the first day of its fiscal year, Jacinto Company issued $14,700,000 of five-year, 8% bonds to finance its operations of producing and selling home improvement products. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 9%, resulting in Jacinto Company receiving cash of $14,118,450. a. Journalize the entries to record the following: 1. Issuance of the bonds. 2. First semiannual interest payment. The bond discount amortization is combined with the semiannual interest payment. 3. Second semiannual interest payment. The bond discount amortization is combined with the semiannual interest payment. If an amount box does not require an entry, leave it blank. Round your answers to the nearest dollar. Cash 1. 14,118,450 Discount on Bonds Payable 581,550 Bonds Payable 14,700,000 2. Interest Expense 529,845 Discount on Bonds Payable v 581,155 Cash V 588,000 Interest Expense 3. 529,845 Discount on Bonds Payable 58,155 Cash 588,000On July 1, Somers Inc. issued $200,000 of 10%, 10-year bonds when the market rate was 12 %. The bonds paid interest semi-annually. A. Assuming the bonds sold at 59.55, what was the selling price of the bonds? B. Explain why the cash received from selling this bond is different from the $200,000 face value of the bond. Investors can earn a higher rate ✓ in other similar bonds so the bond sells at a discountAtom Endeavour Co. Issued $27 million face amount of 5.6% bonds when market Interest rates were 6.24% for bonds of similar risk and other characteristics. Required: a. How much Interest will be paid annually on these bonds? (Enter your answer in dollars, not millions of dollars, 1.e. 1,234,567.) Annual interest payment b. Were the bonds issued at a premium or discount? O Premium O Discount c. Will the annual Interest expense on these bonds be more than, equal to, or less than the amount of Interest paid each year? O Interest expense will be less than the Interest paid. O Interest expense will be more than the Interest paid. O Interest expense will be equal to the Interest paid.
- On July 1, Somers Inc. issued $300,000 of 10%, 10-year bonds when the market rate was 12%. The bonds paid interest semi-annually. A. Assuming the bonds sold at 64.55, what was the selling price of the bonds? B. Explain why the cash received from selling this bond is different from the $300,000 face value of the bond. Investors can earn a in other similar bonds so the bond sells at aA bond of Visador Corporation pays $70 in annual interest, with a $1,000 par value. The bonds mature in 16 years. The market's required yield to maturity on a comparable-risk bond is 8.5 percent. a. Calculate the value of the bond. b. How does the value change if the market's required yield to maturity on a comparable-risk bond (i) increases to 12 percent or (ii) decreases to 5 percent? c. Interpret your finding in parts a and b.2. Krystian Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the market rate was 6%. Interest was paid semi-annually. Calculate and explain the timing of the cash flows the purchaser of the bonds (the investor) will receive throughout the bond term. Would an investor be willing to pay more or less than face value for this bond?