Question

Brief Exercise A-16 xl Your answer is incorrect. Try again. Gleason Enterprises issued 12%, 8-year, $2,770,000 par value bonds that pay interest semiannually on October 1 and April 1. The bonds are dated April 1, 2020, and are issued on that date. The discount rate of interest for such bonds on April 1, 2020, is 14%. Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) What cash proceeds did Gleason receive from issuance of the bonds? (Round answer to 0 decimal places, e.g. 125.) Cash proceeds from issuance of the bonds 2,382,200 Click if you would like to Show Work for this question: Open Show Work

Answer 1

information given in the question: facevatuof On April 1.20 Gleason Enterprises issues 124. Byear $2770,000 Bonds Interest paid semi-annually. October 1 and April 1st Discount rate of interest for the Bond= 144. In the span of 8 years, there are 16 semi-annual periods = 8years x 2 Semi-Annual pericas peryeow = 16 periods) Semi- Annual interest rate = 12 4X 6/12 =67. Semir Annual discount rate = 144.xblz - 7 %) Computation of issue price of the Bond on April- 1.2020: issue price of Bond = ($2.790,000 x 67.) x PUIFAC7%, 16 periods) & $2,770,000 PULF (7%, 16th period.) z ($166/200X9.44665) +($2,370,000 X 0.33873) - $1,570,033-23 +$ 938,282-10 = $ 2,508,815 ] cash Received from Issuance of Bond - $ 2,508,315 |