Waltz Corporation's 20-year bonds were issued 12 years ago. The bonds have a face value of $1,000 and an 8% coupon rate. The current price of the bonds is $ 1,100. The bonds are callable in 5 years at a call price of $1,060. Calculate the yield to maturity (YTM) and yield to call (YTC). Wherever appropriate, show the ( abbreviated) time line (TL) and use two methods: Numerical Solution (NS; show the expression/equation only) and Financial Calculator Solution (FCS). Use | and - to make time lines

Waltz Corporation's 20-year bonds were issued 12 years ago. The bonds have a face value of $1,000 and an 8% coupon rate. The current price of the bonds is $ 1,100. The bonds are callable in 5 years at a call price of $1,060. Calculate the yield to maturity (YTM) and yield to call (YTC). Wherever appropriate, show the ( abbreviated) time line (TL) and use two methods: Numerical Solution (NS; show the expression/equation only) and Financial Calculator Solution (FCS). Use | and - to make time lines

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 3EA: Krystian Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the...

See similar textbooks

Similar questions

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?
Please show complete steps using both formula dn financial calculator. The Lone Star Company has $1,000 par value bonds outstanding at 9 percent interest. The bonds will mature in 19 years. Calculate your final answer using both the formula and financial calculator methods. Compute the current price of the bonds if the present yield to maturity is. (Do not round intermediate calculations. Round your final answers to 2 decimal places. Assume interest payments are annual.) What is the bond price at. . . a. 6 percent b. 8 percent c. 12 percent.
Findlay company recently issued bonds with a 20-year maturity, a 7.5% semiannual coupon, and a par value of $1,000. The going interest rate (kd, rd) is 6.0%, based on semiannual compounding. What is the bond's price? Bond valuation related problems should be solved by using a financial calculator or MS excel spreadsheet. Accordingly, you must show the values of all relevant time valu of money variables
Given below is information about three RM $5000 par value bonds, each of which pays coupon semiannually. The required rate of return on each bond is 12%. 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 10 5 2 12 10 3 14 15 Using the above table, if the company decided to pay coupon annually (12%), calculate the value of the bonds and determine whether the bond is selling at discount, premium or par value Explain the of Bonds available in the market for the Companies to raise fund……Is there any difference in the value of semiannually and annually……
The following is certain information about three bonds. All numerical answers should be calculated to at least two decimal places. By convention, the face value of all bonds is taken as $100. For simplicity, assume coupon payments are paid once a year. Bond A: coupon rate = 9.75%, term to maturity=10 years, current price = $160.55. Bond B: coupon rate = 11.25%, term to maturity=5 years, yield to maturity =2.35% p.a. Bond C: coupon rate = 6%, term to maturity = 1 year, yield to maturity = 1.45% p.a. Find the current price of Bond B. From your answer, what do say about this price when compared with the face value of the bond?
Applied Software has a $1,000 par value bond outstanding that pays 12 percent interest with annual payments. The current yield to maturity on such bonds in the market is 7 percent. Use Appendix B and Appendix D. Compute the price of the bonds for these maturity dates: (Round "PV Factor" to 3 decimal places. Do not round intermediate calculations. Round the final answer to 2 decimal places.) Price of the bond a. 30 years $ b. 15 years $ c. 1 year $
Elliot Enterprises’ bonds currently sell for $1,150; have an 11% coupon interest rate and a $1,000 par value, pay interest annually, and have18 years to maturity. (i) Calculate the bonds’ current yield(ii) Calculate the bonds’ yield to maturity (YTM).(iii) Compare the YTM calculated in part (ii) to the bonds’ coupon interest rate and current yield calculated in part (i). Use a comparison of the bonds’ current price and par value to explain these differences.
Elliot Enterprises' bonds currently sell for $1,150; have an 11% coupon interest rate and a $1,000 par value, pay interest annually, and have18 years to maturity. (i) Calculate the bonds' current yield (ii) Calculate the bonds' yield to maturity (YTM). (iii) Compare the YTM calculated in part (ii) to the bonds' coupon interest rate and current yield calculated in part (i). Use a comparison of the bonds' current price and par value to explain these differences.
Suppose a firm is issuing 10,000 bonds. Each bond has a face amount of $950, a stated rate of 7.5%, and an 18-year term. When the bonds are issued, the market rate for similar bonds is 6.8%. What is the coupon (interest) payment of this bond? Based on the coupon (interest) payment found in (1.), what is the bond price when issued given the market rate of 6.8%? Based on your answer to (2.), explain why investors are either willing to pay more or less than the face amount of $950? How much capital does the firm raise assuming all 10,000 bonds are sold at the bond price you found in (2.)? Suppose after 8 years an investor decides to sell their bond for $925. What is the yield to maturity after 8 years given the bond price of $925? Based on the yield to maturity you calculated in (5.), is the bond at par, a premium bond, or a discount bond? Why? What is the bond price after the 8th year if the yield to maturity is 7.5%?
FinCon, Inc, a group of financial consultants, have $1,000 face value bonds that mature in 20 years. These bonds are are callable at a price of $1060 in 10 years. The bonds carry a 6% semi-annually, and currently sell for $1081. First, compute the yield to maturity and yield to call for the bonds. Then, indicate which one you would you expect to get, YTM or YTC? OYTM 5.34, YTC= 5.40, Expect YTC OYTM 4.96, YTC - 5.21, Expect YTC. OYTM 5.34, YTC 5.40, Expect YTM OYTM 1.34, YTC 1.35, Expect YTM OYTM 4.96, YTC= 5.21, Expect YTM. W
Your company is issuing a bond issue with the following features. Each bond has a face value of $25,000, a 3% coupon rate, and 30 years to maturity. The bond makes coupon payments to its bondholders on January 1 and July 1 of each year. The current yield to maturity for the bond is 5%. Due to issue delays, the bond was issued on March 1, one month after the date used to calculate its first coupon payment (e.g. January 1). Use months, not days, in your interest calculations. Compute to the nearest dollar with no commas and dollar sign, e.g. 490389) А. Had the bond been issued on January 1, what would have been its selling price (e.g. clean price)? В. What was the selling price for the bond when it was issued (e.g. dirty price)?
Springfield Nuclear Energy Inc. bonds are currently trading at$900.29. The bonds have a face value of $1,000, a coupon rate of3.5% with coupons paid annually, and they mature in 20 years. What is the yield to maturity of the bonds? The yield to maturity of the bonds is__________% (Round to two decimal places.)