Homework Answers
| When the market rate of interest exceeds the stated interest rate, the bonds are issued at a discount. |
| When bonds are issue at discount, annual interest expense comprises of cash interest payment and annual amortization of discount. |
| Annual interest expense will exceed the company’s actual cash payments for interest. |
| Option B is correct |
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11. Eaton Company issued $5 million of bonds with a 10% coupon rate of interest. When...
12. Eaton Company issued $5 million of bonds with a 10 % coupon rate of interest....
12. Eaton Company issued $5 million of bonds with a 10 % coupon rate of interest. When Eaton issued the bonds, the market rate of interest was 10 %. Which of the following statements is incorrect? a) The bonds were issued at par. b) Annual interest expense will equal the company's annual cash payments for interest. The book value of the bonds will decrease as cash interest payments are made. c) d) Annual interest expense is the same regardless of...
22. On January 1, 2019, a company issued $400,000 of 10-year, 12% bonds. The interest is...
22. On January 1, 2019, a company issued $400,000 of 10-year, 12% bonds. The interest is payable semiannually on June 30 and December 31. The issue price was $413,153 based on a 10% market interest rate. The effective interest method of amortization is used. Which of the following statements is incorrect? a) The market rate of interest on the sale date was less than the coupon rate of interest. b) The book value of the bond will decrease as the...
Weismann Co. issued 11-year bonds a year ago at a coupon rate of 10 percent. The...
Weismann Co. issued 11-year bonds a year ago at a coupon rate of 10 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 10 percent, what is the current bond price? Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 8 years to maturity,...
if $691,000 of 8% bonds are issued at 94, what is the amount of cash recieved...
if
$691,000 of 8% bonds are issued at 94, what is the amount of cash
recieved from the sale ?
Calculator If $691,000 of 8% bonds are issued at 94, what is the amount of cash received from the sale? Select the correct answer. $635,720 $649,540 $746,280 $691,000 Assignment Main.do?invokerStake AssignmentSessionLocator Binprogressa false Calculator A corporation issues for cash $1,000,000 of 10%, 20-year bonds, interest payable annually, at a time when the market rate of interest is 12%. The straight-line...
when the coupon the All else constant, a bond will sell at yield to maturity a...
when the coupon the All else constant, a bond will sell at yield to maturity a premium; less than a premium; equal to a discount; less than D. a discount; higher than par; less than с. 4 The Walthers Company has a semi-annual coupon bond outstanding tanding. An increase in the market rate of interest will have which of the following effects which of the following effects on the bond? increase the coupon rate decrease the coupon rate increase the...
10 Question5 coupon rate of 8% and were issued to ny issued S1 million, 10-year face-value...
10 Question5 coupon rate of 8% and were issued to ny issued S1 million, 10-year face-value bonds. The bonds have a year end is December 31. Required Copy the yield 6%. The bonds pay interest on May 1 and November 1 . BLK's and complete it. Show all following partial bond amortization schedule in your exam booklet calculations Value of Bonds Interest Period nterest Discount/Premium Discount/Premium Carrying Balance Amortization Interest Expense 2 Opening 2 May 1, 2012 2 November 1,...
1. Company B had issued 10-year bonds a year ago at the coupon rate 6%. The...
1. Company B had issued 10-year bonds a year ago at the coupon rate 6%. The bond makes annual payments. The yield to maturity (YTM) of these bonds is 5%. The face value of the bond is $1000.Calculate the current bond price. 2. During 2017, company XYZ had sales 263658; costs 142213; depreciation expense 36358; interest expense 11698; tax rate 35 percent.Given this information what is company XYZ net income. 3. Company B has a second debt issue on the...
20. On January 1, 2019, Jason Company issued $5.6 million of 11-year bonds at a 11% coupon interest rate t...
20. On January 1, 2019, Jason Company issued $5.6 million of 11-year bonds at a 11% coupon interest rate to be paid annually. The following present value factors have been provided: Time Period Interest 11% PV of $1 0.317 0.388 0.261 PV of a $1 Annuity 6.207 6.805 5.687 9% 13% 11 Calculate the issuance price if the market rate of interest is 13%. a) $4,957,292 b) $5,600,000 c) $4,964,792. d) $5,007,292.
Which of the following statements does not correctly describe the accounting for bonds that were issued...
Which of the following statements does not correctly describe the accounting for bonds that were issued at their face (maturity) value? Multiple Choice The present value of the bonds' future cash flows equals the bonds' maturity value. The interest expense over the life of the bonds will equal the total cash interest payments. The book value of the bond liability decreases when interest payments are made on the due dates. The market rate of interest equals the coupon rate.
On the first day of its fiscal year, Ebert Company issued $12,000,000 of 5-year, 11% bonds...
On the first day of its fiscal year, Ebert
Company issued $12,000,000 of 5-year, 11% bonds to finance its
operations. Interest is payable semiannually. The bonds were issued
at a market (effective) interest rate of 12%, resulting in Ebert
receiving cash of $11,558,459. The company uses the interest
method.
Amortize Premium by Interest Method Shunda Corporation wholesales parts to appliance manufacturers. On January 1, Shunda issued $30,000,000 of five-year, 10% bonds at a market (effective) interest rate of 8%, receiving...
12. Eaton Company issued $5 million of bonds with a 10 % coupon rate of interest. When Eaton issued the bonds, the market rate of interest was 10 %. Which of the following statements is incorrect? a) The bonds were issued at par. b) Annual interest expense will equal the company's annual cash payments for interest. The book value of the bonds will decrease as cash interest payments are made. c) d) Annual interest expense is the same regardless of...
22. On January 1, 2019, a company issued $400,000 of 10-year, 12% bonds. The interest is payable semiannually on June 30 and December 31. The issue price was $413,153 based on a 10% market interest rate. The effective interest method of amortization is used. Which of the following statements is incorrect? a) The market rate of interest on the sale date was less than the coupon rate of interest. b) The book value of the bond will decrease as the...
Weismann Co. issued 11-year bonds a year ago at a coupon rate of 10 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 10 percent, what is the current bond price? Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 8 years to maturity,...
if
$691,000 of 8% bonds are issued at 94, what is the amount of cash
recieved from the sale ?
Calculator If $691,000 of 8% bonds are issued at 94, what is the amount of cash received from the sale? Select the correct answer. $635,720 $649,540 $746,280 $691,000 Assignment Main.do?invokerStake AssignmentSessionLocator Binprogressa false Calculator A corporation issues for cash $1,000,000 of 10%, 20-year bonds, interest payable annually, at a time when the market rate of interest is 12%. The straight-line...
when the coupon the All else constant, a bond will sell at yield to maturity a premium; less than a premium; equal to a discount; less than D. a discount; higher than par; less than с. 4 The Walthers Company has a semi-annual coupon bond outstanding tanding. An increase in the market rate of interest will have which of the following effects which of the following effects on the bond? increase the coupon rate decrease the coupon rate increase the...
10 Question5 coupon rate of 8% and were issued to ny issued S1 million, 10-year face-value bonds. The bonds have a year end is December 31. Required Copy the yield 6%. The bonds pay interest on May 1 and November 1 . BLK's and complete it. Show all following partial bond amortization schedule in your exam booklet calculations Value of Bonds Interest Period nterest Discount/Premium Discount/Premium Carrying Balance Amortization Interest Expense 2 Opening 2 May 1, 2012 2 November 1,...
20. On January 1, 2019, Jason Company issued $5.6 million of 11-year bonds at a 11% coupon interest rate to be paid annually. The following present value factors have been provided: Time Period Interest 11% PV of $1 0.317 0.388 0.261 PV of a $1 Annuity 6.207 6.805 5.687 9% 13% 11 Calculate the issuance price if the market rate of interest is 13%. a) $4,957,292 b) $5,600,000 c) $4,964,792. d) $5,007,292.
Which of the following statements does not correctly describe the accounting for bonds that were issued at their face (maturity) value? Multiple Choice The present value of the bonds' future cash flows equals the bonds' maturity value. The interest expense over the life of the bonds will equal the total cash interest payments. The book value of the bond liability decreases when interest payments are made on the due dates. The market rate of interest equals the coupon rate.
On the first day of its fiscal year, Ebert
Company issued $12,000,000 of 5-year, 11% bonds to finance its
operations. Interest is payable semiannually. The bonds were issued
at a market (effective) interest rate of 12%, resulting in Ebert
receiving cash of $11,558,459. The company uses the interest
method.
Amortize Premium by Interest Method Shunda Corporation wholesales parts to appliance manufacturers. On January 1, Shunda issued $30,000,000 of five-year, 10% bonds at a market (effective) interest rate of 8%, receiving...
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