Assume a firm issues a zero-coupon bond on 1/1/2021. The face value is $5,000,000, and the effective rate is 4.1%, compounded annually over the 20 years of the bond i. Make the amortization table ii. Make the journal entry to issue the bonds on 1/1/2021 iii. Make the entry to record interest on 12/31/2021 and 12/31/2022 iv. Make the entry to retire the principle of the bonds on 12/31/2040v. For every entry, record the effects
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Assume a firm issues a zero-coupon bond on 1/1/2021. The face value is $5,000,000, and the effective rate is 4.1%, compounded annually over the 20 years of the bond
i. Make the amortization table
ii. Make the
iii. Make the entry to record interest on 12/31/2021 and 12/31/2022
iv. Make the entry to retire the principle of the bonds on 12/31/2040v. For every entry, record the effects
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- f. Now assume the date is October 25, 2019. Assume further that a 12%,10-year bond was issued on July 1, 2019, pays interest semiannually (onJanuary 1 and July 1), and sells for $1,100. Use your spreadsheet to findthe bond’s yield.Assume that a bond is issued with the following characteristics: Date of bonds: January 1, 2023; maturity date: Dec. 31, 2027; face value: $200,000; Coupon interest rate: 10 percent paid semiannually; market interest rate: 12 percent; issue price: $185,280; bond discount is amortized using the effective interest method of amortization. What is the amount of bond discount amortization for the June 30, 2023, adjusting entry? A) $559 B) $1,117 C) $10,000 D) $11,117North Co. Issued bonds on July 1, 2018 worth $100,000 with a coupon rate of 10% and an effective interest rate of 8%. Interest is paid annually, every July 1, and bonds mature after 5 years. Required: PV of Bonds: Calculation PV of Principal and PV of Interest and give your explanation about your calculation! Make issuance journal and please explain about the journal! Amortization: Calculation Bond Amortization Table and explain the result! Make Interest adjustment, amortization journal, and explain about the journal! Make Interest payment journal, amortization, and explain about the journal! Journalize Redemption at maturity and explain about the journal!
- David Palmer identified the following bonds for investment: Bond A: A $1 million par, 10% annual coupon bond, which will mature on July 1, 2025. 2) 1) Bond B: A $1 million par, 14% semi-annual coupon bond (interest will be paid on January 1 and July 1 each year), which will mature on July 1, 2031. Bond C: A S1 million par, 10% quarterly coupon bond (interest will be paid on January 1, April 1, July 1, and October 1 each year), which will mature on July 1, 2026. 3) The three bonds were issued on July 1, 2011. (a) If Bond B is issued at face value and both Bond B and Bond A are having the same yield to maturity (EAR) at issuance, calculate the market price of Bond A on July 1, 2011. [Note: Full mark would only be given to correct answer of which the values of those variables not provided in the question directly are derived.] (b) David Palmer purchased Bond C on January 1, 2014 when Bond C was priced to have a yield to maturity (EAR) of 10.3812891%. David subsequently sold Bond C on…David Palmer identified the following bonds for investment: BondA: A$1millionpar,10%annualcouponbond,whichwillmature on July 1, 2025. Bond B: A $1 million par, 14% semi-annual coupon bond (interest will be paid on January 1 and July 1 each year), which will mature on July 1, 2031. Bond C: A $1 million par, 10% quarterly coupon bond (interest will be paid on January 1, April 1, July 1, and October 1 each year), which will mature on July 1, 2026. The three bonds were issued on July 1, 2011. (a) If Bond B is issued at face value and both Bond B and Bond A are having the same yield to maturity (EAR), calculate the market price of Bond A on July 1, 2011. [N ote: Full mark would only be given to correct answer of which the values of those variables not provided in the question directly are derived.] (b) David purchased the Bond C on January 1, 2014 when Bond C was priced to have a yield to maturity (EAR) of 10.3812891%. David subsequently sold Bond C on January 1, 2016…Consider a zero-coupon debt with a face value of $1,000 issued on December 31, 2040. The bondhas three years to maturity and a yield to maturity of 5%.Required: Compute the price of the zero-coupon debt as of December 31, 2040 and find interestexpenses and the balance of the debt principal to be reported at the end of each year, 2041through 2043.
- David Palmer identified the following bonds for investment: Bond A: A $1 million par, 10% annual coupon bond, which will mature on July 1, 2025. Bond B: A $1 million par, 14% semi-annual coupon bond (interest will be paid on January 1 and July 1 each year), which will mature on July 1, 2031. Bond C: A $1 million par, 10% quarterly coupon bond (interest will be paid on January 1, April 1, July 1, and October 1 each year), which will mature on July 1, 2026. The three bonds were issued on July 1, 2011. If Bond B is issued at face value and both Bond B and Bond A are having the same yield to maturity (EAR) at issuance, calculate the market price of Bond A on July 1, 2011. David Palmer purchased Bond C on January 1, 2014 when Bond C was priced to have a yield to maturity (EAR) of 10.3812891%. David subsequently sold Bond C on January 1, 2016 when it was priced to have a yield to maturity (EAR) of 12.550881%. Assume all interests received were reinvested to earn a rate of return of…David Palmer identified the following bonds for investment:Bond A: A $1 million par, 10% annual coupon bond, which will mature on July 1, 2025. Bond B: A $1 million par, 14% semi-annual coupon bond (interest will be paid on January 1 and July 1 each year), which will mature on July 1, 2031.Bond C: A $1 million par, 10% quarterly coupon bond (interest will be paid on January 1, April 1, July 1, and October 1 each year), which will mature on July 1, 2026.The three bonds were issued on July 1, 2011.If Bond B is issued at face value and both Bond B and Bond A are having the same yield to maturity (EAR) at issuance, calculate the market price of Bond A on July 1, 2011.[Note: Full mark would only be given to correct answer of which the values of those variables not provided in the question directly are derived.] David Palmer purchased Bond C on January 1, 2014 when Bond C was priced to have a yield to maturity (EAR) of 10.3812891%. David subsequently sold Bond C on January 1, 2016 when it…David Palmer identified the following bonds for investment: Bond A: A $1 million par, 10% annual coupon bond, which will mature on July 1, 2025. Bond B: A $1 million par, 14% semi-annual coupon bond (interest will be paid on January 1 and July 1 each year), which will mature on July 1, 2031. Bond C: A $1 million par, 10% quarterly coupon bond (interest will be paid on January 1, April 1, July 1, and October 1 each year), which will mature on July 1, 2026. The three bonds were issued on July 1, 2011. David Palmer purchased Bond C on January 1, 2014 when Bond C was priced to have a yield to maturity (EAR) of 10.3812891%. David subsequently sold Bond C on January 1, 2016 when it was priced to have a yield to maturity (EAR) of 12.550881%. Assume all interests received were reinvested to earn a rate of return of 3% per quarter (in another investment account). Calculate: i) the current yield, ii) the 2-year capital gains yield and iii) the 2-year total rate of return on investment…
- David Palmer identified the following bonds for investment: Bond A: A $1 million par, 10% annual coupon bond, which will mature on July 1, 2025. Bond B: A $1 million par, 14% semi-annual coupon bond (interest will be paid on January 1 and July 1 each year), which will mature on July 1, 2031. Bond C: A $1 million par, 10% quarterly coupon bond (interest will be paid on January 1, April 1, July 1, and October 1 each year), which will mature on July 1, 2026. The three bonds were issued on July 1, 2011. If Bond B is issued at face value and both Bond B and Bond A are having the same yield to maturity (EAR) at issuance, calculate the market price of Bond A on July 1, 2011. [Can I have the equation please]Company H issues a $20,000,000 bond on January 1, 2020 with a coupon rate of 9%. The present value of the bond is $20,811,010 and the market rate of interest was 8%. The bond has a 5-year life and will make semiannual interest payments and will use the straight line amortization method. A) Is the bond issued at a face value, a discount, or premium? B) What is the amount of the semi-annual interest payments? C) What is the amount that will be recorded to interest expense each time an interest payment is made? D) What is the carrying value of the bond on December 31, 2021?Consider an investor who, on January 1, 2022, purchases a TIPS bond with an original principal of $111,000, an 10 percent annual (or 5 percent semiannual) coupon rate, and 15 years to maturity. a. If the semiannual inflation rate during the first six months is 0.5 percent, calculate the principal amount used to determine the first coupon payment and the first coupon payment (paid on June 30, 2022). b. From your answer to part a, calculate the inflation-adjusted principal at the beginning of the second six months. c. Suppose that the semiannual inflation rate for the second six-month period is 1.3 percent. Calculate the inflation-adjusted principal at the end of the second six months (on December 31, 2022) and the coupon payment to the investor for the second six-month period. (For all requirements, round your answers to 2 decimal places. (e.g., 32.16)) a. Principal amount Coupon payment b. Inflation-adjusted principal c. Inflation-adjusted principal at the end of the second six months…