Question

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

Answer #1

Answer: |

Semiannual period = 10 x 2 = 20 periods |

Semiannual interest rate = 6% / 2 = 3% |

Semiannual market Interest rate = 5% / 2 = 2.5% |

Interest Amount = $ 500,000 x 6% x 6 /12 = $ 15,000 |

Issue price of Bond = Interest Amount x PVAF ( 2.5%, 20 periods ) + Face Value x PVF ( 2.5%, 20 periods ) = ($ 15,000 x 15.56816 ) + ($ 500,000 x 0.61027) = $ 233,522.40 + $ 305,135 = $ 538,657.40 = $ 538,973 (option Closes to ) |

Option (C ) is
Correct |

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%. Using a financial calculator or Excel, what
is the issue price of the bonds?
Multiple Choice
$464,469.
$537,194.
$500,000.
$538,973.
Red Corp. has a rate of return on assets of 10% and a debt to
equity ratio of 2 to 1. Not including any...

On January 1, 2020, Overwater Experiences issues a bond due in 5
years with a coupon/stated interest rate of 6% and a face value of
$100,000. Interest payments are made semi-annually on 6/30 and
12/31. The market rate for this type of bond is 7%. The bond sold
for $95,842. What will be the carrying value of the bond on
December 31, 2020?

Christmas Anytime issues $710,000 of 5% bonds, due in 10 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:
1. The market interest rate is 5% 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 tables
provided. Do not round interest rate...

Christmas Anytime issues $730,000 of 6% bonds, due in 15 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:
Required:
1.
a) The market interest rate is 6% 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 tables provided. Do
not...

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
issue.

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:...

Issue $500,000 of bonds. The bonds issue would be developed with
a stated rate of 6% and would be a 10 years bong with interest paid
semi-annually on June 30 and December 31.
The current market rate for a similar bond is 4%.
John would like the journal entry for the bond issue and journal
entry for first two interest payments. the company would
use the effective interest rate to amortize any bond discount or
premium.

On January 1, 2018, Water World issues $25.9 million of 6%
bonds, due in 20 years, with interest payable semiannually on June
30 and December 31 each year. Water World intends to use the funds
to build the world’s largest water avalanche and the “tornado”— a
giant outdoor vortex in which riders spin in progressively smaller
and faster circles until they drop through a small tunnel at the
bottom. 1-a. If the market rate is 5%, calculate the issue price....

1. ABC Co. issues $500,000, 10%, 10 year bonds when the
prevailing market rate of interest is 11%. The bonds pay interest
annually. Compute the issue price of the bonds.(I tried 470552,
470124, 470450 are wrong answers)
2. ABC Co. issues $500,000, 10%, 10 year bonds when the
prevailing market rate of interest is 9%. The bonds pay interest
semi-annually. Compute the issue price of the bonds.(WRONG 532498,
106504 532300)
Please give a correct answer. Thanks

On January 1, 2018, Frontier World issues $39.1 million of 9%
bonds, due in 20 years, with interest payable semiannually on June
30 and December 31 each year. The proceeds will be used to build a
new ride that combines a roller coaster, a water ride, a dark
tunnel, and the great smell of outdoor barbeque, all in one
ride.
If the market rate is 8%, calculate the issue price. (FV of $1,
PV of $1, FVA of $1, and...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 59 seconds ago

asked 8 minutes ago

asked 42 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago