Managerial Accounting: Tools for Business Decision Making
7th Edition
ISBN: 9781118334331
Author: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Publisher: WILEY
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Chapter A, Problem A.13BE
Dempsey Railroad Co. is about to issue $400,000 of 10-year bonds paying an 11% interest rate, with interest payable semiannually. The discount rate for such securities is 10%. How much can Dempsey expect to receive for the sale of these bonds?
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2. DEF Company will issue $8,000,000 in 10%, 10-year bonds when the market
rate of interest is 7%. Interest is paid semiannually.
Required:
a. Will this interest structure result in a Premium for DEF company or a Discount?
b. How much cash will be received from the issuance of the bond?
c. How much will the semi-annual interest payment be on the bond?
Blossom Railroad Co is about to issue $318,000 of 10 year bonds paying an 12% interest rate with interest payable annually. The discount rate for such securities is 8%. How much can Blossom expect to receive for the sale of these bonds?
Abbott, Inc., plans to issue $500,000 of ten percent bonds that will pay interest semiannually and mature in five years. Assume that the effective interest rate is 12 percent per year compounded semiannually. How would I Calculate the selling price of the bonds.
Chapter A Solutions
Managerial Accounting: Tools for Business Decision Making
Ch. A - Prob. A.1BECh. A - Kor each of the following cases, indicate (a) what...Ch. A - Liam Company signed a lease for an office building...Ch. A - Prob. A.4BECh. A - Prob. A.5BECh. A - Prob. A.6BECh. A - For each of the following cases, indicate (a) what...Ch. A - Prob. A.8BECh. A - Prob. A.9BECh. A - Prob. A.10BE
Ch. A - Prob. A.11BECh. A - Prob. A.12BECh. A - Dempsey Railroad Co. is about to issue 400,000 of...Ch. A - Prob. A.14BECh. A - Neymar Taco Company receives a 75,000, 6-year note...Ch. A - Prob. A.16BECh. A - Frazier Company issues a 10%, 5-year mortgage note...Ch. A - Prob. A.18BECh. A - Prob. A.19BECh. A - Prob. A.20BECh. A - Prob. A.21BECh. A - Prob. A.22BECh. A - Prob. A.23BECh. A - Prob. A.24BECh. A - Prob. A.25BECh. A - As the purchaser of a new house, Carrie Underwood...Ch. A - Using a financial calculator, solve for the...Ch. A - Using a financial calculator, provide a solution...
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- McAllen Corporation is issuing a $20,000,000 20-year bond with a stated interest rate of 10%. This bond pays interest semiannually every June 30 and December 31. Assume that the market rate of interest is 12%. What would be the issue price of this bond?arrow_forwardThe Latham Corporation is planning on issuing bonds that pay no interest but can be converted into $1,000 at maturity, 7 years from their purchase. To price these bonds competitively with other bonds of equal risk, it is determined that they should yield 6 percent, compounded annually. At what price should the Latham Corporation sell these bonds?arrow_forwardSunland Company is about to issue $464,000 of 10-year bonds paying an 11% interest rate, with interest payable annually. The discount rate for such securities is 10%. Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) How much can Sunland expect to receive for the sale of these bonds? (Round answer to O decimal places, e.g. 2,575.) Sunland can expect to receive $ Barbara Jones made an investment of $7,606.08. From this investment, she will receive $1,000 annually for the next 15 years starting one year from now. Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) What rate of interest will Barbara's investment be earning for her? (Hint: Use Table 4.) (Round answer to 0 decimal places, e.g. 25%.) Rate of interest %arrow_forward
- Barrett Enterprises issues bonds with a face value of $900,000 on their issue date. The bonds mature in 5 years and pay 6% annual interest in semiannual payments. On the issue date, the market rate of interest (annual) is 8%. How would I Compute the price of the bonds on their issue date.arrow_forwardFitzgerald's 15​-year bonds pay 6 percent interest annually on a ​$1,000 par value. If the bonds sell at $875​, what is the​ bond's yield to​ maturity? What would be the yield to maturity if the bonds paid interest​ semiannually? Explain the difference.arrow_forwardSMC will be issuing bonds with a face value of P100,000 through an underwriter. The underwriter will be issuing the bonds at 106 but will charge 7% on face amount. The bonds will be irredeemable and will pay 8% annually. If the tax rate is 25%, what is the effective cost of the bonds?arrow_forward
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