Question

Given the information below, which bond(s) will be issued at a discount? Stated Rate of Return Market Rate of Return Bond 1 7% 5% Bond 2 8% 8% Bond 3 12% 14% Bond 4 9% 11% Bond 3. Bond 4. Bonds 3 and 4

Answer 1

SOLUTION :
Answer = 1
	Answer = Option 4 = Bond 3 and Bond4
Answer = 2
	Answer = Option 2 = $ 246,803
Answer = 3
	Retirement value	$                     50.70	Million
	Carrying Value	$                     53.50	Million
	Market Value	$                     47.90	Million
	Gain on retirement = $ 53.50 - $ 47.90	$                       5.60
	Answer = Option 1 = A credit of $ 5.6 Million to a gain account
Answer = 4
	Interest expenses pf 2021 = $ 802,552 + $ 805,705 =	$            16,08,257
	Answer = Option 3 = $ 1,608,257
Answer = 5
	Market Interest rate = interest expenses / Carrying value
	Market Interest rate = $ 7,578 / $ 108,264
	Market Interest rate = 0.07 or 7%
	Answer = Option 3 = 7%
Answer = 6)
	Market Interest rate = interest expenses / Carrying value
	Market Interest rate = $ 720,811 / $ $ 14,416,217
	Market Interest rate = 0.05 or 5% for half year
	Annual interest = 5% x 2 = 10%
	Answer = Option 4 = 10%