Question

Bridgeport Inc. has issued three types of debt on January 1, 2020, the start of the company’s fiscal year. (a) $10 million, 12-year, 15% unsecured bonds, interest payable quarterly. Bonds were priced to yield 11%. (b) $25 million par of 12-year, zero-coupon bonds at a price to yield 11% per year. (c) $16 million, 12-year, 10% mortgage bonds, interest payable annually to yield 11%. Prepare a schedule that identifies the following items for each bond: (1) maturity value, (2) number of interest periods over life of bond, (3) stated rate per each interest period, (4) effective-interest rate per each interest period, (5) payment amount per period, and (6) present value of bonds at date of issue.

	Unsecured Bonds			Zero-Coupon Bonds			Mortgage Bonds
(1)		Maturity value		$			$			$
(2)		Number of interest periods
(3)		Stated rate per period			%			%			%
(4)		Effective rate per period			%			%			%
(5)		Payment amount per period		$			$			$
(6)		Present value

Answer 1

unsecured Bonds Zero Coupon bonds Mortgage Bonds Maturity value to million 25 million $16 million 48 12 number of interest periods 0 3.75 1.11 Stated Date Per period (1524) 2.75 112 Effective rate per period ("12/4) $•375 million $1.6 million payment amount per period Present Valne $ 12,989,924 $7146021 $ 14961223 WN - Maineity value face value Wonin Quartery= 4x12 - 48 periods Einny atbe onltats) 11%; Quarterly 11% /4 = 2.75% Wony = Present value is calculated using PUNE PUIFA Tables