The following information about two independent bond issues was reported in the financial press: 1. Province...
The following information about two independent bond issues was
reported in the financial press:
| 1. | Province of Manitoba 2.30% bonds, maturing January 1, 2020, were trading at a price of 91.20 to yield a market interest rate of 3.08%. | |
| 2. | Loblaw Companies Limited 8.01% bonds, maturing November 23, 2033, were trading at a price of 134.00 to yield a market interest rate of 4.95%. |
Were the Province of Manitoba bonds issued at a premium or a
discount?
Were the Loblaw bonds issued at a premium or a discount?
Record the issue of $100,000 of each of these two bonds.
Homework Answers
| 1 | |||
| Province of Manitoba bonds were issued at discount | |||
| Loblaw bonds were issued at a premium | |||
| 2 | |||
| Province of Manitoba: | |||
| Debit | Credit | ||
| Cash | 91200 | =100000*0.9120 | |
| Discount on Bonds payable | 8800 | ||
| Bonds payable | 100000 | ||
| Loblaw Companies Limited: | |||
| Debit | Credit | ||
| Cash | 134000 | =100000*1.34 | |
| Bonds payable | 100000 | ||
| Premium on Bonds payable | 34000 | ||
Add Answer to:
The following information about two independent bond issues was
reported in the financial press:
1.
Province...
Assume that the following are independent situations recently reported in the Wall Street Journal. 1. General...
Assume that the following are independent situations recently reported in the Wall Street Journal. 1. General Electric (GE) 7% (contractual rate) bonds, maturing January 28, 2018, were issued at 111.12. 2. Boeing 7% (contractual rate) bonds, maturing September 24, 2032, were issued at 99.08. Instructions (a) Were GE and Boeing bonds issued at a premium or a discount? (b) Explain how bonds, both paying the same contractual interest rate, could be issued at different prices. (c) Prepare the journal entry...
Jules issues 4.5%, five-year bonds dated January 1, 2009, with a $230,000 par value. The bonds...
Jules issues 4.5%, five-year bonds dated January 1, 2009, with a $230,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $235,160. The annual market rate is 4% on the issue date. Required: Is this bond trading at a discount or premium A.discount B. premium Explain why the bond in question is trading at a discount/premium (answer should be less than 20 words).
if you are not given the par value of the bond, then assume it to be...
if you are not given the par value of the bond, then
assume it to be 1000.
Question 2 PepsiCo. Inc. shares trade on NasdaqGS under the ticker symbol PEP. In 2019, analysts forecasted a five-year growth rate of 8% when the current dividend was(Dy=$ 2.3).Suppose PepsiCo.Inc. grows at 8% for five years and then at 5% thereafter. Assuming an 7% discount rate, what is the present value of the PEP's share? The current price is 134.06 (November 18.2019), would...
Ajax Company issued a $10,000,000 dollar bond on Oct 1, 2019, with a coupon rate of...
Ajax Company issued a $10,000,000 dollar bond on Oct 1, 2019, with a coupon rate of 8.84% and a market rate of 7.44%. The bonds have a 30-year maturity and interest on the bonds are paid semi-annually on April 1 and Oct 1. Answer the following questions regarding this bond: What is the face value of this bond? How many bonds are being issued? What is the is issue price of these bonds? What is the semi-annual amount of interest...
is this correct? answer all this blank Bond Price United States Steel Corporation's 7.5% bonds due...
is this correct?
answer
all this blank
Bond Price United States Steel Corporation's 7.5% bonds due in 2022 were reported as selling for 104.5. Were the bonds selling at a premium or at a discount? Why is United States Steel able to sell its bonds at this price? The bonds were selling at a discount because the market rate of interest for similar quality bonds was lower than 7.5% Entries for Issuing Bonds bonds on May 1 of the current...
1. The following table summarizes prices of various default-free, zero-coupon bonds (expressed as a percentage of...
1. The following table summarizes prices of various default-free, zero-coupon bonds (expressed as a percentage of face value): Maturity (years) Price (per $100 face value) $95.51 9105 $86.38 $81.65 $76.51 (a) Compute the yield to maturity for each bond. (b) Plot the zero-coupon yield curve (for the first five years). (c) Is the yield curve upward sloping, downward sloping, or flat? 2. Suppose a seven-year, $1000 bond with an 8% coupon rate and semiannual coupons is trading with a yield...
es EX 11-1 Bond price Obj. 1 United States Steel Corporation's 7.5% bonds due in 2022...
es EX 11-1 Bond price Obj. 1 United States Steel Corporation's 7.5% bonds due in 2022 were reported as selling for 104.5. Were the bonds selling at a premium or at a discount? Why is United States Steel able to sell its bonds at this price? WORLD EX 11-2 Entries for issuing bonds Obj. 2 Thomson Co. produces and distributes semiconductors for use by computer manufacturers. Thomson issued $900,000 of 10-year, 7% bonds on May 1 of the current year...
Please help me answer BUS201-Financial Accounting (U-Term) Chapter 10 Class Exercises 1. On May 1, Redhead...
Please help me answer
BUS201-Financial Accounting (U-Term) Chapter 10 Class Exercises 1. On May 1, Redhead Clothiers borrowed $90,000 on a 3-month note to provide cash during the slow season of the year. The interest rate on the note was 496. What was the total cost of financing? 2. Sago Company Ltd. publishes a monthly sports magazine, Home Cooking. Subscriptions to the magazine cost $30 per year. During November 2017, Sago sells 2,800 subscriptions for cash. Subscriptions begin with the...
Required (1) Assume the bonds are issued at 103 on June 1 to yield an effective...
Required (1) Assume the bonds are issued at 103 on June 1 to yield an effective inter- est rate of 10.1 percent. Prepare entries in journal form for June 1, 20x7, November 30, 20x7, and May 31, 20x8. (Round amounts to the nearest dollar.) 2. Assume the bonds are issued at 97 on June 1 to yield an effective interest rate of 10.9 percent. Prepare entries in journal form for June 1, 20x7. November 30, 20x7, and May 31, 20x8....
[The following information applies to the questions displayed below.] On January 1, 2021, Frontier World issues...
[The following information applies to the questions displayed
below.] On January 1, 2021, Frontier World issues $40.1 million of
9% bonds, due in 20 years, with interest payable semiannually on
June 30 and December 31 each year. The proceeds will be used to
build a new ride that combines a roller coaster, a water ride, a
dark tunnel, and the great smell of outdoor barbeque, all in one
ride.
1-8. If the market rate is 8%, calculate the issue price....
if you are not given the par value of the bond, then
assume it to be 1000.
Question 2 PepsiCo. Inc. shares trade on NasdaqGS under the ticker symbol PEP. In 2019, analysts forecasted a five-year growth rate of 8% when the current dividend was(Dy=$ 2.3).Suppose PepsiCo.Inc. grows at 8% for five years and then at 5% thereafter. Assuming an 7% discount rate, what is the present value of the PEP's share? The current price is 134.06 (November 18.2019), would...
is this correct?
answer
all this blank
Bond Price United States Steel Corporation's 7.5% bonds due in 2022 were reported as selling for 104.5. Were the bonds selling at a premium or at a discount? Why is United States Steel able to sell its bonds at this price? The bonds were selling at a discount because the market rate of interest for similar quality bonds was lower than 7.5% Entries for Issuing Bonds bonds on May 1 of the current...
1. The following table summarizes prices of various default-free, zero-coupon bonds (expressed as a percentage of face value): Maturity (years) Price (per $100 face value) $95.51 9105 $86.38 $81.65 $76.51 (a) Compute the yield to maturity for each bond. (b) Plot the zero-coupon yield curve (for the first five years). (c) Is the yield curve upward sloping, downward sloping, or flat? 2. Suppose a seven-year, $1000 bond with an 8% coupon rate and semiannual coupons is trading with a yield...
es EX 11-1 Bond price Obj. 1 United States Steel Corporation's 7.5% bonds due in 2022 were reported as selling for 104.5. Were the bonds selling at a premium or at a discount? Why is United States Steel able to sell its bonds at this price? WORLD EX 11-2 Entries for issuing bonds Obj. 2 Thomson Co. produces and distributes semiconductors for use by computer manufacturers. Thomson issued $900,000 of 10-year, 7% bonds on May 1 of the current year...
Please help me answer
BUS201-Financial Accounting (U-Term) Chapter 10 Class Exercises 1. On May 1, Redhead Clothiers borrowed $90,000 on a 3-month note to provide cash during the slow season of the year. The interest rate on the note was 496. What was the total cost of financing? 2. Sago Company Ltd. publishes a monthly sports magazine, Home Cooking. Subscriptions to the magazine cost $30 per year. During November 2017, Sago sells 2,800 subscriptions for cash. Subscriptions begin with the...
Required (1) Assume the bonds are issued at 103 on June 1 to yield an effective inter- est rate of 10.1 percent. Prepare entries in journal form for June 1, 20x7, November 30, 20x7, and May 31, 20x8. (Round amounts to the nearest dollar.) 2. Assume the bonds are issued at 97 on June 1 to yield an effective interest rate of 10.9 percent. Prepare entries in journal form for June 1, 20x7. November 30, 20x7, and May 31, 20x8....
[The following information applies to the questions displayed
below.] On January 1, 2021, Frontier World issues $40.1 million of
9% bonds, due in 20 years, with interest payable semiannually on
June 30 and December 31 each year. The proceeds will be used to
build a new ride that combines a roller coaster, a water ride, a
dark tunnel, and the great smell of outdoor barbeque, all in one
ride.
1-8. If the market rate is 8%, calculate the issue price....
Most questions answered within 3 hours.
-
Assume Kw = 1.01 ✕ 10−14
For pure water, we can calculate [H3O+ ] = [OH...
asked 39 minutes ago -
Suppose that on a temperature scale X, water boils at 203.0°X
and freezes at -105.7°X. What...
asked 1 hour ago -
BaS crystallizes in a cubic unit cell with S2- ions on each
corner and each face....
asked 1 hour ago -
A. 0≤P(Oi)≤10≤P(Oi)≤1 for each i
B. P(Oi)≤0P(Oi)≤0
C. P(Oi)=1+P(OCi)P(Oi)=1+P(OiC)
D. P(Oi)≥1P(Oi)≥1
If an experiment consists of...
asked 3 hours ago -
A battery has an emf of 9.20V and an internal resistance of 1.20
ohm. a)What resistance...
asked 3 hours ago -
The area of an elastic circular loop decreases at a constant
rate, dA/dt = −6.60×10−3 m2/s...
asked 4 hours ago -
The denaturation of proteins can be described by the
equilibrium
F⇌U
where F and U represent...
asked 6 hours ago -
Please answer what the maximum and minimum force is, and the
angle on the ion is...
asked 6 hours ago -
implement a program that reads a number of rows and a symbol.
The program will draw...
asked 6 hours ago -
Assume that when adults with smartphones are randomly selected,
45% use them in meetings or classes....
asked 6 hours ago -
Determine the number of formula units of
Na2SO4 and moles of oxygen contained in 8.11
moles...
asked 6 hours ago -
Explain in steps on the following code
What would be the output when executed
using System;...
asked 6 hours ago