On January 1, 2025, Blossom Co. issued ten-year bonds with a face value of $6,750,000 and a stated interest rate of 10 %, payable semiannually on June 30 and December 31. The bonds were sold to yield 12 %. Table values are: Present value of 1 for 10 periods at 10% 0.38554 Present value of 1 for 10 periods at 12% 0.32197 Present value of 1 for 20 periods at 5 % 0.37689 Present value of 1 for 20 periods at 6 % 0.31180 Present value of annuity for 10 periods at 10 % 6.14457 Present value of annuity for 10 periods at 12 % 5.65022 Present value of annuity for 20 periods at 5% 12.46221 Present value of annuity for 20 periods at 6% 11.46992 1. Calculate the issue price of the bonds. 2. Prepare he amortization table for 2025, assuming that amortization is recorded on interest payment dates using the effective - interest method.
On January 1, 2025, Blossom Co. issued ten-year bonds with a face value of $6,750,000 and a stated interest rate of 10 %, payable semiannually on June 30 and December 31. The bonds were sold to yield 12 %. Table values are: Present value of 1 for 10 periods at 10% 0.38554 Present value of 1 for 10 periods at 12% 0.32197 Present value of 1 for 20 periods at 5 % 0.37689 Present value of 1 for 20 periods at 6 % 0.31180 Present value of annuity for 10 periods at 10 % 6.14457 Present value of annuity for 10 periods at 12 % 5.65022 Present value of annuity for 20 periods at 5% 12.46221 Present value of annuity for 20 periods at 6% 11.46992 1. Calculate the issue price of the bonds. 2. Prepare he amortization table for 2025, assuming that amortization is recorded on interest payment dates using the effective - interest method.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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