Karson Company. issues 10-year bonds maturity, face value of $200,000 and16% interest rate. If the bonds are issued at 180,000 how much do you expect the market interest rate: Select one: a. % 6 b. % 4 C. %10 d. The answer does not exist e. % 8
Q: When the market rate of interest was 12%, Halprin Corporation issued $701,000, 11%, 10-year bonds…
A: One of the source used by the business organization in order to raise the funds is issue of bonds.…
Q: Wildhorse Co. is about to issue $329,900 of 6-year bonds paying an 11% interest rate, with interest…
A: Bonds payable are one of the sources of finance and are shown as liability. If the interest rate…
Q: Nero Solutions Co. issued an $800,000, 6%, three-year bond for $806,000. The bond pays interest…
A: As posted multiple sub parts we are answering only first three sub parts kindly repost the…
Q: Brin Company issues bonds with a par value of $700,000. The bonds mature in 6 years and pay 6%…
A: A journal entry is a type of accounting entry that is used to record a business transaction in a…
Q: nviro Company issues 8%, 10-year bonds with a par value of $250,000 and semiannual interest…
A: Bonds payable are one of the sources of finance and are shown as liability. If the interest rate is…
Q: The Desreumaux Company has two bonds outstanding. Both bonds pay $100 annua interest plus $1,000 at…
A: Calculation of Value of Bond: Excel Spreadsheet: Excel Workings:
Q: he selling price of this bond issue was?
A:
Q: Your company issues $3,500,000 bonds at 7% interest with annual interest payments. Bonds have a…
A: A bond is a loan the investors give to the company or a business. The company repays the bond with…
Q: ABC Company will issue $5,600,000 in 8%, 10-year bonds when the market rate of interest is 10%.…
A: One of the source of raising the funds by the business entities is issue of debt securities i.e.…
Q: Novak Corporation issues $570,000 of 9% bonds that are due in 8 years and pay interest…
A: Issue price of bond. Interest x PVAF (r,n) + Principal x PVAF (r,n) Where, r = 8%/2 = 4% or 0.04 n =…
Q: Splish Brothers Inc. issues $7,600,000 of 5% bonds due in 5 years with interest payable at year-end.…
A: Bonds are issued by large organizations such as corporations, municipal organizations, state or…
Q: When the market rate of interest was 12%, Halprin Corporation issued $1,000,000, 11%, 10-year bonds…
A: Option c is the correct option.
Q: When the market rate of interest was 12%, Halprin Corporation issued s768,000, 11%, five year bonds…
A: Lets understand the basics. When market interest rate is more than the bond interest rate bond is…
Q: Allington Corp. issues $560,000 of 9% bonds that pay interest semiannually and mature in 10 years.…
A: Issue price of the bonds = Present value of principal + Present value of interest payments where,…
Q: White Company issued P2,000,000 face value of 10-year bonds on January 1. The bonds pay interest on…
A: A financial instrument that doesn’t affect the ownership of the common shareholders or management of…
Q: Enviro Company issues 8%, 10-year bonds with a par value of $250,000 and semiannual interest…
A: Given: Company’s issues = 8% Life of bond = 10 years Par value = $ 250,000 Annual market rate = 5 %…
Q: When the market rate of interest was 12%, Halprin Corporation issued $678,000, 11%, four-year bonds…
A: Selling price of bond issue = Present value of redemption value + Present value of interest…
Q: Squabb Corporation issued a $12,000,000, 5-year bond, with a contract rate of 8%. The market rate of…
A: The bonds are the financial instruments for the business which are used to raise money from the…
Q: Ocean Adventures issues bonds due in 10 years with a stated interest rate of 6% and a face value of…
A: Issue price of bond is the present value of future cash inflows PV = PV of face value + PV of…
Q: When the market rate of interest was 12%, Halprin Corporation issued $397,000, 11%, four-year bonds…
A: Bonds are a form of loan or debt issued by the company, on which company has to make regular…
Q: Garcia Company issues 10%, 15-year bonds with a par value of $240,000 and semiannual interest…
A: Cash proceeds from the issuance of bonds = Par value of bonds x Issue price %
Q: Tuck Co. plans on issuing three-year, 12% term bonds with face amount of P2,000,000. If the current…
A: It is pertinent to note that initial carrying value or the issue price of the bond is the present…
Q: per bond, at 105. Eá An entity issued 5,000 10-year bonds, face amount pond is accompanied by one…
A: Solution Given Issue price 105 Coupon rate on bond 10% Market rate of similar bond…
Q: Enviro Company issues 8%, 10-year bonds with a par value of $250,000 and semiannual interest…
A: Premium on bonds payable = Cash proceeds from issuance of bonds - Par value of bonds Semi annual…
Q: Splish Inc. issues $3,700,000 of 7% bonds due in 12 years with interest payable at year-end. The…
A: Current price of the bond is the present value of future payments to be received. Future payments…
Q: Bringham Company issues bonds with a par value of $520,000. The bonds mature in 10 years and pay 8%…
A: Solution 1: Chart Values are based on: n= (10 Years*2) 20 Half years i= (10%/2) 5%…
Q: Amount received by Splish when bonds were issued
A: Computation of amount received by Splish on issue of bonds shall be shown below :
Q: Garcia Company issues 10%, 15-year bonds with a par value of $240,000 and semiannual interest…
A: Amortization of bond discounts using Effective Method: The issuance of bond at a price lower than…
Q: Beluga Inc. issued 10-year bonds with a face value of $150,000 and a stated rate of 3% when the…
A: Bonds are issued by the company to raise an amount of money for financing projects of the company…
Q: At the beginning of current year, Marble Co. issued 10-year bonds with a face amount of P 5,000,000…
A: Total PV of bonds at the time of issuance = PV of Annual Interest Payments + PV of Redemption Value…
Q: The Garraty Company has two bond issues outstanding. Both bonds pay $100 annual interest plus $1,000…
A: The bond is a type of instrument that is issued by the organization to the owners for financing the…
Q: Newport Industries issued ten-year, $100,000 bonds paying semi-annual interest. When the annual…
A: Bonds are the debt securities which are issued by the organizations whether private or government.…
Q: Power Solutions Ltd. issues a $14,000,000, five-year, 4.5% bond with semi-annual interest payments.…
A: Bond is a long-term debt instrument that is used by organizations to raise debt funds from public.…
Q: Beluga Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 3% when the…
A: Bonds are fixed-income securities issued by a corporate organization to borrow funds from other…
Q: Enviro Company issues 12.50%, 10-year bonds with a par value of $470,000 and semiannual interest…
A: Cash proceeds from the issue of bond = Par value x Selling price, Semi-annual interest expense =…
Q: nviro Company issues 8%, 10-year bonds with a par value of $250,000 and semiannual interest…
A: Solution 1: Cash proceeds = Par value * 87.5% = 250000 *87.5% = $218,750
Q: Basil Corporation issues for cash $1,000,000 of 8%, 10-year bonds, interest payable annually, at a…
A: Bond premium: Bond premium is the amount by which the selling price (or issue price or market price)…
Q: On January 1, the Ryan Company issued $400,000 of 6%, 6-year bonds when the market rate of interest…
A: The cash collected from the issue of bonds is referred to as bond proceeds.
Q: Bringham Company issues bonds with a par value of $660,000 on their stated issue date. The bonds…
A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…
Q: Bringham Company issues bonds with a par value of $600,000. The bonds mature in 10 years and pay 6%…
A: Price of bond: The price of a bond is the sum of the present value of interest and the present value…
Q: When the market rate of interest was 12%, Halprin Corporation issued $395,000, 11%, four-year bonds…
A: A bond is a borrowing security issued by a company to raise funds from the market by making an…
Q: Muscat Co. has an issue of OMR1,000 par value bonds with a 9% stated interest rate outstanding. The…
A: Using excel PV function
Q: When the market rate of interest was 12%, Halprin Corporation issued $346,000, 11%, four-year bonds…
A: Answer) Calculation of Selling Price of Bonds Face Value of Bonds = $ 346,000 Annual rate of…
Q: A company issued 5%, 20-year bonds with a face amount of $100 million. The market yield for bonds of…
A:
Q: Concord Inc. issues $ 2,300,000 of 7% bonds due in 12 years with interest payable at year-end. The…
A: Value of bond is the present value of the future coupon payments and the present value of the bond…
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
Step by step
Solved in 2 steps with 2 images
- tELLiy, you must enter your ID number on the first sheet! On January 1, 2020 Omsk Corporation issued Bonds pay interest each July 1 and January 1. 150,000 of 5 % bonds, due in 17 years 12 % market rate of interest. Assume Requirements (Round to 0 decimals, Rounding errors do not matter): 1. Compute market price of bonds. Provide detailed computation. Use functions in Excel 2. What is an amount of discount /premium? Indicate, what it is (discount or premium). Computation. 3. Prepare amortization schedule for first 5 years. Use formulas in Excel. 4. Prepare journal entry to record bond issue. 5. Prepare journal entry on July 1, 2020. 6. Prepare journal entry on December 31, 2020. 7. Prepare journal entry on January 1, 2021Use the following to answer questions 4-7 (Round answers to the nearest dollar) The company issues 7.4%, 5-year bonds with a total face amount of $100,000. The market interest rate for bonds of similar risk and maturity is 7.6%. Interest is paid semi-annually. DO NOT ROUND YOUR ANSWERS UNTIL YOU FULLY COMPLETE THE PROBLEM SET (input your answers after you've completed the entire problem). 5. 7. will S expense? S payment? (rounded to nearest dollar). What is the issue price of the bond? (rounded to nearest dollar). When the company records the first interest payment, how much record company for interest. the (rounded to nearest dollar). What is the bond liability (carrying amount) after the first interest (rounded to nearest dollar). When the company records the second interest payment, how much will the company record for interest expense?Use the following to answer questions 8 – 10 (Round answers to the nearest dollar) BZ Corp issues 5.0%, 10-year bonds with a total face amount of $1,000,000. The market interest rate for bonds of similar risk and maturity is 5.1%. semiannually. Interest is paid $ issue price of the bond? 8. (rounded to nearest dollar) What is the 9. $ (rounded to nearest dollar) When the company records the 2nd interest payment, how much will the company record for interest expense? 10. $ (rounded to nearest dollar) What is the bond liability (carrying amount) after the 2nd interest payment?
- Use the following to answer questions 8-10 (Round answers to the nearest dollar) The company issues 9%, 10-year bonds with a total face amount of $100,000. The market interest rate for bonds of similar risk and maturity is 9%. Interest is paid semiannually. What is the issue price of the bond? When the company records the 2nd interest payment, how much will the company record for 8. $ 9. $ interest expense? 10. $ . What is the bond liability (carrying amount) after the 2nd interest payment?Atom Endeavour Co. Issued $27 million face amount of 5.6% bonds when market Interest rates were 6.24% for bonds of similar risk and other characteristics. Required: a. How much Interest will be paid annually on these bonds? (Enter your answer in dollars, not millions of dollars, 1.e. 1,234,567.) Annual interest payment b. Were the bonds issued at a premium or discount? O Premium O Discount c. Will the annual Interest expense on these bonds be more than, equal to, or less than the amount of Interest paid each year? O Interest expense will be less than the Interest paid. O Interest expense will be more than the Interest paid. O Interest expense will be equal to the Interest paid.5 On January 1, Ruiz Company issued bonds as follows: Face Value: Number of Years: Stated Interest Rate: Interest payments per year 7 B 9 0 1 2 AWN IC $500,000 a) Required: 1) Calculate the bond selling price given the two market interest rates below. Use formulas that reference data from this worksheet and from the appropriate future or present value tables (found by clicking the tabs at the botto this worksheet). Note: Rounding is not required. 15 7% 2 Annual Market Rate Semiannual Interest Payment: PV of Face Value: +PV of Interest Payments: Bond Selling Price: Annual Market Rate Semiannual Interest Payment: PV of Face Value: +PV of Interest Payments: = Bond Selling Price: 9% $17,500 133,500.01 285,055.55 418,555.56 6.00% $17,500 205,993.38 5343,007.72 $549,001.10 +
- On January 1, Ruiz Company issued bonds as follows: Face Value: $500,000 Number of Years: 15 Stated Interest Rate: 7% Interest payments per year 2 Question: 1) Calculate the bond selling price given the two market interest rates below. Use formulas that reference data from this worksheet and from the appropriate future or present value tables (found by clicking the tabs at the bottom of this worksheet). Note: Rounding is not required. Use (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1.)Related to Checkpoint 9.2) (Yield to maturity) The Saleemi Corporation's $1,000 bonds pay 8 percent interest annually and have 15 years until maturity. You can purchase the bond for $1,075. a. What is the yield to maturity on this bond? b. Should you purchase the bond if the yield to maturity on a comparable-risk bond is 6 percent? Question content area bottom Part 1 a. The yield to maturity on the Saleemi bonds is enter your response here%. (Round to two decimal places.) Part 2 b. You ▼ should should not purchase the bonds because your yield to maturity on the Saleemi bonds is ▼ greater less than the one on a comparable risk bond. (Select from the drop-down menus.)Atom Endeavour Co. issued $48 million face amount of 12.0% bonds when market interest rates were 13.38% for bonds of similar risk and other characteristics. Required: a. How much interest will be paid annually on these bonds? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.) Annual interest payment b. Were the bonds issued at a premium or discount? O Premium O Discount c. Will the annual interest expense on these bonds be more than, equal to, or less than the amount of interest paid each year? O Interest expense will be less than the interest paid. O Interest expense will be more than the interest paid. O Interest expense will be equal to the interest paid.
- Reynolds Co. ISsued $87 million face amount of 11.00% bonds when market interest rates were 10.90% for bonds of similar risk and other characteristics. Required: 0. How much interest will be paid annually on these bonds? (Enter your answer In dollars, not milons of dollars.) b. Were the bonds issued at a premium or discount? c. Will the annual Interest expense on these bonds be more than, equal to, or less than the amount of interest paid each year? a Annual interest payment b. Bonds issued C. Annual interest expense will beNorth Co. Issued bonds on July 1, 2018 worth $100,000 with a coupon rate of 10% and an effective interest rate of 8%. Interest is paid annually, every July 1, and bonds mature after 5 years. Required: PV of Bonds: Calculation PV of Principal and PV of Interest and give your explanation about your calculation! Make issuance journal and please explain about the journal! Amortization: Calculation Bond Amortization Table and explain the result! Make Interest adjustment, amortization journal, and explain about the journal! Make Interest payment journal, amortization, and explain about the journal! Journalize Redemption at maturity and explain about the journal!Current Attempt in Progress × Your answer is incorrect. Marin Inc. issues $2,100,000 of 7% bonds due in 10 years with interest payable at year-end. The current market rate of interest fo bonds of similar risk is 9%. Click here to view factor tables. What amount will Marin receive when it issues the bonds? (For calculation purposes, use 5 decimal places as displayed in the factor tabl provided and final answer to O decimal places, e.g. 458,581.)