Paul Dirac & Associates begin operations on 1/1/X1 by issuing a 3.00 year term (Bullet) bond with a par value of $3,800,000. The bond pays interest semi annually. On the date of issuance, the annual coupon rate of the bond is 3.000% while the annual required rate of return in the debt capital markets (the discount rate) is 4.250%. Dirac assumes that he will earn $1,700,000 in cash revenues and incur cash operating expenses of 45.000% of revenues each 6 month period for the next 3.00 fiscal years. The corporate tax rate is assumed to be 21.00%. Questions 1) Create an amortization table for the Bond. 2) What is the Price of the bond? What is the Value of any discount or premium? 3) Provide all journal entries and T-accounts for this transaction over the next 3 years.
Paul Dirac & Associates begin operations on 1/1/X1 by issuing a 3.00 year term (Bullet) bond with a par value of $3,800,000. The bond pays interest semi annually. On the date of issuance, the annual coupon rate of the bond is 3.000% while the annual required rate of return in the debt capital markets (the discount rate) is 4.250%. Dirac assumes that he will earn $1,700,000 in cash revenues and incur cash operating expenses of 45.000% of revenues each 6 month period for the next 3.00 fiscal years. The corporate tax rate is assumed to be 21.00%.
Questions
1) Create an amortization table for the Bond.
2) What is the Price of the bond? What is the Value of any discount or premium?
3) Provide all
4) Based on the information in the problem, create semi-annual pro-forma financial statements (I/S, SRE, B/S) for Dirac & Associates for the next 3 years (6 Semi-annual periods).
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