Shamrock Inc. has issued three types of debt on January 1, 2020, the start of the company’s fiscal year: 1. $8 million, 11-year, 15% unsecured bonds, with interest payable quarterly, priced to yield 13% 2. $2.9 million par of 9-year, zero-coupon bonds at a price to yield 13% per year 3. $16 million, 9-year, 11% mortgage bonds, with interest payable annually to yield 13% Prepare a schedule that identifies the following items for each bond: (For calculation purposes, use 5 decimal places as displayed in the factor table provided round percentages to 2 decimal places, e.g. 15.12% and all other answers to 0 decimal places, e.g. 5,275. Do not leave any answer field blank. Enter 0 for amounts.) Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1.
Unsecured Bonds |
Zero- Coupon Bonds |
Mortgage Bonds |
|||||||||
(a) | Maturity value | $ | $ | $ | |||||||
(b) | Number of interest periods over the life of the bond | ||||||||||
(c) | Stated rate for each interest period | % | % | % | |||||||
(d) | Effective interest rate for each interest period | % | % | % | |||||||
(e) | Payment amount per period | $ | $ | ||||||||
(f) | Present value of the bonds at the date of issue | $ | $ |
Unsecured Bonds | hint | Zero-Coupon Bonds | hint | Mortgage Bonds | hint | ||
1 | Maturity value | $8,000,000 | $2,900,000 | $16,000,000 | |||
2 | Number of interest periods | 44(11*4) | 9 | 9 | |||
3 | Stated rate per period | 3.75% | (15%/4) | 0 | 11% | ||
4 | Effective rate per period | 3.25% | (13%/4) | 13% | 13% | ||
5 | Payment amount per period | $ 300,000 | (8M x 3.75%) | 0 | $1,760,000 | (16M x 11%) | |
6 | Present value | $ 8,929,350 | (300,000 x 23.2365) +(8000000 x 0.2448) |
$ 965,410 | (2,900,000 x 0.3329) | $ 14,358,192 | (1760000 x 5.1317) +(16000000 x 0.3329) |
Shamrock Inc. has issued three types of debt on January 1, 2020, the start of the...
Exercise 14-2 Kingbird Inc, has issued three types of debt on January 1, 2020, the start of the company's fiscal year: 1. $8 million, 11-year, 15% unsecured bonds, with interest payable quarterly, priced to yield 13% 2. $2.5 million par of 12-year, zero-coupon bonds at a price to yield 13% per year 3. $17 million, 12-year, 12% mortgage bonds, with interest payable annually to yield 13% Prepare a schedule that identifies the following items for each bond: (For calculation purposes,...
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Exercise 14-11 Sunland Inc. has issued three types of debt on January 1, 2020, the start of the company’s fiscal year. (a) $11 million, 11-year, 15% unsecured bonds, interest payable quarterly. Bonds were priced to yield 12%. (b) $28 million par of 11-year, zero-coupon bonds at a price to yield 12% per year. (c) $17 million, 11-year, 11% mortgage bonds, interest payable annually to yield 12%. Prepare a schedule that identifies the following items for each bond: (1) maturity value,...