Question

On May 1, 2021, Joe purchased $220,000 in zero-coupon bonds that mature on May 1, 2041. The bonds pay no interest during the

0 0
Add a comment Improve this question Transcribed image text
Answer #1

Face Value of Bonds = $220,000
Interest Rate = 8% compounded annually
Time to Maturity = 20 years

Purchase Price = $220,000 * PV of $1 (8%, 20)
Purchase Price = $220,000 * 0.2145
Purchase Price = $47,190

So, price paid by Joe is $47,190

Add a comment
Know the answer?
Add Answer to:
On May 1, 2021, Joe purchased $220,000 in zero-coupon bonds that mature on May 1, 2041....
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • On May 1, 2021. Joe purchased $200,000 in zero-coupon bonds that mature on May 1, 2041....

    On May 1, 2021. Joe purchased $200,000 in zero-coupon bonds that mature on May 1, 2041. The bonds pay no interest during the period of time they are outstanding. The interest rate for such borrowings is at 9%. Interest compounds annually. (EV of $1. PV of $1 FVA of $1. PVA Of 51. FVAD of $1 and PVAD of 51) (Use appropriate factor(s) from the tables provided. Enter your answer rounded to the nearest whole dollar.) Required: Calculate the price...

  • On May 1, 2021, Joe purchased $270,000 in zero-coupon bonds that mature on May 1, 2041....

    On May 1, 2021, Joe purchased $270,000 in zero-coupon bonds that mature on May 1, 2041. The bonds pay no interest during the period of time they are outstanding. The interest rate for such borrowings is at 10%. Interest compounds annually. (CV of $1. PV of $1. EVA Of 51. PVA Of $1. FVADO $1 and PVADOR $1 (Use appropriate factor(s) from the tables provided. Enter your answer rounded to the nearest whole dollar.) Required: Calculate the price Joe paid...

  • Help! :) On January 1, 2021, Morton Sales Co. issued zero-coupon bonds with a face value...

    Help! :) On January 1, 2021, Morton Sales Co. issued zero-coupon bonds with a face value of $6.7 million for cash. The bonds mature in 12 years and were issued at a price of $3,329,699. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Q. What total interest expense will Morton Sales Co. report over the 12 year life of these bonds? (Enter...

  • On January 1, 2021, Morton Sales Co. issued zero-coupon bonds with a face value of $7.0...

    On January 1, 2021, Morton Sales Co. issued zero-coupon bonds with a face value of $7.0 million for cash. The bonds mature in 8 years and were issued at a price of $3,781,890. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: What amount of interest expense on these bonds would Morton Sales Co. report in its 2021 income statement?

  • On January 1, 2021 Morton Sales Co. issued zero-coupon bonds with a face value of $6.3...

    On January 1, 2021 Morton Sales Co. issued zero-coupon bonds with a face value of $6.3 milion for cash. The bonds mature in 10 years and were issued at a price of $2.661183 FV of $1. PV of St. FVA 51. PUAS. EVAD of Stand PVAD $ (Use appropriate factor(s) from the tables provided.) Required: What amount of interest expense on these bonds would Morton Sales Co. report in its 2021 income statement? (Enter your answer rounded to the nearest...

  • ​On September 30, 2021, the San Fillipo Corporation issued 8% stated rate bonds with a face amount of $340 million.

    On September 30, 2021, the San Fillipo Corporation issued 8% stated rate bonds with a face amount of $340 million. The bonds mature on September 30, 2041 (20 years). The market rate of interest for similar bonds was 10%. Interest is paid semiannually on March 31 and September 30. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: Determine the price of the...

  • On January 1, 2018, Morton Sales Co. issued zero-coupon bonds with a face value of $6.5...

    On January 1, 2018, Morton Sales Co. issued zero-coupon bonds with a face value of $6.5 million for cash. The bonds mature in 12 years and were issued at a price of $2,886,065. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: What will Morton Sales Co. report on these bonds in its December 31, 2018, balance sheet? (Enter your answer rounded...

  • On January 1, 2021, Morton Sales Co. issued zero-coupon bonds with a face value of $6.5...

    On January 1, 2021, Morton Sales Co. issued zero-coupon bonds with a face value of $6.5 million for cash. The bonds mature in 12 years and were issued at a price of $2,886,065. (FV Of S1 PV of $1. FVA of $1. PVA of $1. EVAD of S1 and PVAD of SD (Use appropriate factor(s) from the tables provided.) Required: What will Morton Sales Co. report on these bonds in its December 31, 2021, balance sheet? (Round your intermediate calculations...

  • On December 31, 2021, Interlink Communications issued 5% stated rate bonds with a face amount of...

    On December 31, 2021, Interlink Communications issued 5% stated rate bonds with a face amount of $115 million. The bonds mature on December 31, 2051. Interest is payable annually on each December 31, beginning in 2022. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Determine the price of the bonds on December 31, 2021, assuming that the market rate of interest for...

  • On January 1, 2021, Mania Enterprises issued 15% bonds dated January 1, 2021, with a face...

    On January 1, 2021, Mania Enterprises issued 15% bonds dated January 1, 2021, with a face amount of $28 million. The bonds mature in 2033 (10 years). For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: Determine the price of...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT