Question

The following terms relate to independent bond issues:

A: 420 bonds; $1,000 face value; 8% stated rate; 5 years; annual interest payments

B: 420 bonds; $1,000 face value; 8% stated rate; 5 years; semiannual interest payments

C: 840 bonds; $1,000 face value; 8% stated rate; 10 years; semiannual interest payments

D: 1,990 bonds; $500 face value; 12% stated rate; 15 years; semiannual interest payments

Use the appropriate present value table: PV of $1 and PV of Annuity of $1 Required: Assuming the market rate of interest is 10%, calculate the selling price for each bond issue. If required, round your intermediate calculations and final answers to the nearest dollar.

Answer #1

**Answer**

A) Selling price of Bond

= {1000 ÷ (1+0.10) ^5} + { 80 x (1 - (1+0.10) ^-5) ÷ 0.10
}

= **$ 924.18**

**= $ 924 ( round off)**

B) Selling price of Bond

= {1000 ÷ (1+0.05) ^10} + { 40 x (1 - (1+0.05) ^-10) ÷ 0.05
}

**= $ 922.77**

**= $ 923 ( round off)**

C) Selling price of Bond

= {1000 ÷ (1+0.05) ^30} + { 40 x (1 - (1+0.05) ^-30) ÷ 0.05
}

**= $ 875.36**

**= $ 875 ( round off)**

D) Selling price of Bond

= {500 ÷ (1+0.05) ^30} + { 30 x (1 - (1+0.05) ^-30) ÷ 0.05
}

**= $ 576.86**

**= $ 577 ( round off)**

Issue Price
The following terms relate to independent bond issues:
570 bonds; $1,000 face value; 8% stated rate; 5 years; annual
interest payments
570 bonds; $1,000 face value; 8% stated rate; 5 years;
semiannual interest payments
860 bonds; $1,000 face value; 8% stated rate; 10 years;
semiannual interest payments
1,990 bonds; $500 face value; 12% stated rate; 15 years;
semiannual interest payments
Use the appropriate present value table:
PV of $1 and PV of Annuity of $1
Required:
Assuming the...

Issue Price The following terms relate to independent bond
issues: 430 bonds; $1,000 face value; 8% stated rate; 5 years;
annual interest payments 430 bonds; $1,000 face value; 8% stated
rate; 5 years; semiannual interest payments 810 bonds; $1,000 face
value; 8% stated rate; 10 years; semiannual interest payments 2,110
bonds; $500 face value; 12% stated rate; 15 years; semiannual
interest payments Use the appropriate present value table: PV of $1
and PV of Annuity of $1 Required: Assuming the...

Issue Price
The following terms relate to independent bond issues:
650 bonds; $1,000 face value; 8% stated rate; 5 years; annual
interest payments
650 bonds; $1,000 face value; 8% stated rate; 5 years;
semiannual interest payments
870 bonds; $1,000 face value; 8% stated rate; 10 years;
semiannual interest payments
2,020 bonds; $500 face value; 12% stated rate; 15 years;
semiannual interest payments
Use the appropriate present value table:
PV of $1 and PV of Annuity of $1
Required:
Assuming the...

ssue Price
The following terms
relate to independent bond issues:
460 bonds; $1,000 face value; 8% stated rate; 5 years; annual
interest payments
460 bonds; $1,000 face value; 8% stated rate; 5 years;
semiannual interest payments
890 bonds; $1,000 face value; 8% stated rate; 10 years;
semiannual interest payments
1,830 bonds; $500 face value; 12% stated rate; 15 years;
semiannual interest payments
Use the appropriate
present value table:
PV of $1 and PV of
Annuity of $1
Required:
Assuming the...

14.. Ocean Adventures issues bonds due in 10 years with a stated
interest rate of 6% and a face value of $500,000. Interest payments
are made semi-annually. The market rate for this type of bond is
5%. What is the issue price of the bonds?
A. $537,194.
B. $464,469.
C. $538,973.
D. $500,000.
PV 1 2.5% 20pds .61027 PVA 2.5% 20pds 15.56816 PV 1 3% 10pds
.74409 PV A 3% 20pds 14.87747

Heyward Company issues 10-year bonds with a face value of
$4,000,000 and a stated annual interest rate of 5%. The bonds pay
interest semiannually on June 30 and December 31. The annual market
rate of interest on the date of issue is 6%. Provide the journal
entry that the company will make to record the bond
issue.

Bryant Inc. issues 10-year bonds with a face value of
$8,000,000 and a stated annual interest rate of 2%. The bonds pay
interest annually on December 31. The annual market rate of
interest on the date of issue is 3%. Provide the journal entry that
the company will make to record the bond
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Bringham Company issues bonds with a par value of $560,000 on
their stated issue date. The bonds mature in 8 years and pay 7%
annual interest in semiannual payments. On the issue date, the
annual market rate for the bonds is 10%. (Table B.1, Table B.2,
Table B.3, and Table B.4) (Use appropriate factor(s) from
the tables provided.)
1. What is the amount of each semiannual interest
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Bond Valuation
All bonds have a $1,000 face or par
value unless otherwise stated. kc is the coupon
rate and kdis the market cost of debt.
A $1,000 par value bond pays interest
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4.38%
8.75%
4.56%
8.49%
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