Homework Answers
Answer
- Correct Answer = Option #2: $ 92,561
- Concept
|
Bonds issue price is calculated by ADDING the: |
|
Discounted face value of bonds payable at 'applicable' market rate of interest [Face value x PV Factor], and |
|
Discounted Interest payments amount (during the lifetime) at 'applicable' market rate of interest [Interest payment x PV Annuity factor] |
- Workings
|
Face Value |
$ 100,000.00 |
|
Term (in years) |
10 |
|
Total no. of interest payments |
20 |
|
Annual Rate |
Applicable rate, because of Semi Annual payments |
|
|
Market Rate |
6.0% |
3.0% |
|
Coupon Rate |
5.0% |
2.5% |
- Answer calculation
|
Amount |
PV factor |
Present Values |
|
|
PV of Face Value of |
$ 100,000.00 |
0.553675754 |
$ 55,367.58 |
|
PV of Interest payments of |
$ 2,500.00 |
14.87747486 |
$ 37,193.69 |
|
Issue Price of Bonds |
$ 92,561.26 ANSWER |
||
Add Answer to:
Knowledge Check 01 Wally, Inc. issues $100,000 of 5% bonds, due in 10 years, when the market rate of interest is 6%...
Knowledge Check 01 Kinsey Corporation issues $100,000 of 8% bonds, due in 25 years, when the...
Knowledge Check 01 Kinsey Corporation issues $100,000 of 8% bonds, due in 25 years, when the market rate of interest is 9%. Interest is paid semiannually on June 30 and December 31. The issue price of the bonds is: Multiple Choice o $90119 o $9017 o $92,586 c $100,000
Belmont Corporation issues $100,000 of 7% bonds, due in 10 years, when the market rate of...
Belmont Corporation issues $100,000 of 7% bonds, due in 10 years, when the market rate of interest is 5%. Interest is paid semiannually on June 30 and December 31. The issue price of the bonds is: Multiple Choice o $85,788 o $104,646 o $108,752 o $15,589
Frederick Corporation issues $100,000 of 8% bonds, due in 20 years, when the market rate of interest is 7%. Interes...
Frederick Corporation issues $100,000 of 8% bonds, due in 20 years, when the market rate of interest is 7%. Interest is paid semiannually on June 30 and December 31. The issue price of the bonds is: Multiple Choice o $100,000 o $107106 o $10,594 o $110,678
Knowledge Check 01 Zeta Corporation issues $100,000 of 8% bonds maturing in 10 years on January...
Knowledge Check 01 Zeta Corporation issues $100,000 of 8% bonds maturing in 10 years on January 1, Year 1, when the market rate of interest is 9%. The bonds were issued at a discount, Market interest rates drop to 7% by December 31, Year 1. The company retires these bonds on December 31, Year 1. How much did it cost the company to retire them? Multiple Choice $106,595 $100,000 o oo $93,496
Knowledge Check 01 Crawford Corporation issues $100,000 of 7 % bonds on January 1, Year 1....
Knowledge Check 01 Crawford Corporation issues $100,000 of 7 % bonds on January 1, Year 1. The bonds have a six-year term and pay interest semiannually on June 30 and December 31 each year. Assuming a market interest rate of 6%, what is interest expense on the bonds on December 31, Year 1?
Knowledge Check 01 Mufala, Inc., will issue $10,000,000 of 6% 10-year bonds. The market rate for...
Knowledge Check 01 Mufala, Inc., will issue $10,000,000 of 6% 10-year bonds. The market rate for bonds with paid by Mufala semiannually. What is the issue price of the bonds? (Refer to the appropriate table in the Present and Future Value Tables section of your text. (Round your answer to the nearest whole dollar.) similar risk and maturity is 8%. Interest will be Issue price of the bonds
18. Sand Explorers issues bonds due in 10 years with a stated interest rate of 8%...
18. Sand Explorers issues bonds due in 10 years with a stated interest rate of 8% and a face value of $190,000. Interest payments are made semi-annually. The market rate for this type of bond is 7%. Using present value tables, calculate the issue price of the bonds (EV of S1, PV of S1, EVA of 51. PVA of SI EVAD. 51 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Multiple Choice $149,966 $234.429 $190,000 $203.502. 19....
On January 1, Year 1, McGee Corporation issues 5%, 10-year bonds with a face amount of $100,000. Interest is paid semian...
On January 1, Year 1, McGee Corporation issues 5%, 10-year bonds with a face amount of $100,000. Interest is paid semiannually on June 30 and December 31. On issuance date, the market rate of interest is 5%; therefore, the issue price of the bonds is $100,000. The journal entry for the issuance of the bonds will include a:
Coney Island Entertainment issues $1,400,000 of 7% bonds, due in 20 years, with interest payable semiannually on June 3...
Coney Island Entertainment issues $1,400,000 of 7% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year. Calculate the issue price of a bond and complete the first three rows of an amortization schedule when: value: 7.69 points Required information Required: 1. The market interest rate is 7% and the bonds issue at face amount. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the...
Hillinger Inc. Issues $100,000 of 4% bonds in Jan 1 year 1. the bonds have a...
Hillinger Inc. Issues $100,000 of 4% bonds in Jan 1 year 1. the bonds have a five-year term and pay interest semiannually on June 30 and December 31 each year. assuming a market interest rate of 5% and an issue price of $95,624, what is the carrying value of the bonds as pf June 30, Year 1?
Knowledge Check 01 Kinsey Corporation issues $100,000 of 8% bonds, due in 25 years, when the market rate of interest is 9%. Interest is paid semiannually on June 30 and December 31. The issue price of the bonds is: Multiple Choice o $90119 o $9017 o $92,586 c $100,000
Belmont Corporation issues $100,000 of 7% bonds, due in 10 years, when the market rate of interest is 5%. Interest is paid semiannually on June 30 and December 31. The issue price of the bonds is: Multiple Choice o $85,788 o $104,646 o $108,752 o $15,589
Frederick Corporation issues $100,000 of 8% bonds, due in 20 years, when the market rate of interest is 7%. Interest is paid semiannually on June 30 and December 31. The issue price of the bonds is: Multiple Choice o $100,000 o $107106 o $10,594 o $110,678
Knowledge Check 01 Zeta Corporation issues $100,000 of 8% bonds maturing in 10 years on January 1, Year 1, when the market rate of interest is 9%. The bonds were issued at a discount, Market interest rates drop to 7% by December 31, Year 1. The company retires these bonds on December 31, Year 1. How much did it cost the company to retire them? Multiple Choice $106,595 $100,000 o oo $93,496
Knowledge Check 01 Crawford Corporation issues $100,000 of 7 % bonds on January 1, Year 1. The bonds have a six-year term and pay interest semiannually on June 30 and December 31 each year. Assuming a market interest rate of 6%, what is interest expense on the bonds on December 31, Year 1?
Knowledge Check 01 Mufala, Inc., will issue $10,000,000 of 6% 10-year bonds. The market rate for bonds with paid by Mufala semiannually. What is the issue price of the bonds? (Refer to the appropriate table in the Present and Future Value Tables section of your text. (Round your answer to the nearest whole dollar.) similar risk and maturity is 8%. Interest will be Issue price of the bonds
18. Sand Explorers issues bonds due in 10 years with a stated interest rate of 8% and a face value of $190,000. Interest payments are made semi-annually. The market rate for this type of bond is 7%. Using present value tables, calculate the issue price of the bonds (EV of S1, PV of S1, EVA of 51. PVA of SI EVAD. 51 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Multiple Choice $149,966 $234.429 $190,000 $203.502. 19....
Coney Island Entertainment issues $1,400,000 of 7% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year. Calculate the issue price of a bond and complete the first three rows of an amortization schedule when: value: 7.69 points Required information Required: 1. The market interest rate is 7% and the bonds issue at face amount. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the...
Most questions answered within 3 hours.
-
The EastTN Company sells computer parts through a retail store
that it operates. The firm's comparative...
asked 3 minutes ago -
Which complex in the electron transport chain does not
contribute to the proton gradient across the...
asked 3 minutes ago -
Use MATLAB:
Use a conditional while loop to find the first factorial that is
greater than...
asked 7 minutes ago -
Many describe estate and gift taxation as “political football.”
Discuss arguments for and against the transfer...
asked 8 minutes ago -
Pine wood has the following composition: 50.31% C,
6.20% H2, 43.08% Oz and 0.41% ash.
(a)...
asked 21 minutes ago -
A toy cannon uses a spring to project a 5.22-g soft rubber ball.
The spring is...
asked 21 minutes ago -
If a firm has an EV of $1,840 million and EBITDA of $377
million, what is...
asked 21 minutes ago -
Candy Kane Cosmetics (CKC) produces Leslie Perfume, which
requires chemicals and labor. Two production processes are...
asked 27 minutes ago -
Determine the heat involved in the combustion of liquid
hydrazine by using the following reactions. Use...
asked 28 minutes ago -
The proportion of Canadians with green eyes is 0.36. As part of
a study of the...
asked 37 minutes ago -
3) How does Descartes’s hyperbolic doubt compare to the
skepticism that Socrates expresses in the Platonic...
asked 34 minutes ago -
How many coulombs are required to plate a layer of chromium
metal 0.27 mm thick on...
asked 48 minutes ago