Question

15 year, 12% bond with $100 000 ON 1 September of 2011 – prepare to pay for this bond if it is now September 2018 and rate of return is 14%

Answer #1

A 15 year bond issued on 1
September 2011 has 8 years of remaining maturity on 1 September
2018. Price of this bond on 1 September 2018 is **$
907.22** calculated using the PV function of Excel as
below.

Note: coupon payment frequency is assumed as annual.

Blackaby plc issued a bond with a par value of $1 000 in
September 2012, redeemable in September 2018 at par.The coupon is
8% payable annually in September –first payment in 2013
Calculate the price investors will pay for this bond at the
time of issue if the market rate of interest for a security in this
risk class is 7%
Compute the bonds value in the secondary market in September
2015 if interest rates rise by 200 basis points...

XYZ issues a 15-year, $20,000,000 bond on September 1, 2019
with a stated interest rate of 3.4%, payable semiannually. Market
interest rates on September 1, 2019 were 3.8%. Prepare the journal
entry to record the transaction on September 1, 2019.
Prepare the journal entries to record interest expense and
other accounts for XYZ’s bond for the first 2 interest payments
(ignore year-end accruals)

Related to Checkpoint 9.2 and Checkpoint 9.3) (Bond
valuation) Fingen's 14-year, $1 000 par value bonds pay 9
percent interest annually. The market price of the bonds is $1
comma 100 and the market's required yield to maturity on a
comparable-risk bond is 10 percent. a. Compute the bond's yield
to maturity. b. Determine the value of the bond to you, given
your required rate of return. c. Should you purchase the
bond?

Consider a 15-year bond with a face value of $ 1 comma 000 that
has a coupon rate of 5.3 %, with semiannual payments.
a. What is the coupon payment for this bond?
b. Draw the cash flows for the bond on a timeline

MKC issued 100 000 of 8%, 10 year bonds dated 1/1/16. The bonds
pay interest each 12/31 and were sold to yield 9%. On 3/1/18 all of
the bonds are repurchased on the open market at 99 plus accrued
interest and retired. MKC uses effective interest rate method.
Prepare all entries from 1/1/16 to 3/1/18

(Bond valuation) Fingen's 15 year, $ 1,000 par value bonds pay
12 percent interest annually. The market price of the bonds is $
1,110 and the market's required yield to maturity on a
comparable-risk bond is 9 percent.
a. Compute the bond's yield to maturity.
b. Determine the value of the bond to you, given your required
rate of return.
c. Should you purchase the bond?

You buy a bond from ABC Corporation that has a 12 year, 6%
coupon, $1000 pay value for a price of $1000. The bond pays
interest semi-annually. One year from now, interest rates have
risen by 2%, so that they are now at 8% per year. What rate of
return did you earn on this bond?

The Company sold $2,500,000 of 8 percent, five-year bonds on
January 1, 2011, and would pay interest semiannually, on June 30
and December 31 of each of the five years. It sold the bonds on
January 1, 2011, at 96 because the market rate of interest for
similar investments was 9 percent. It decided to amortize the bond
discount by using the effective interest method.
15. With regard to the bond issue on January 1, 2011, how much
cash is...

(Related to Checkpoint 9.2 and Checkpoint 9.3) (Bond valuation)
Fingen's 14 -year, $1 comma 000 par value bonds pay 9 percent
interest annually. The market price of the bonds is $1 comma 100
and the market's required yield to maturity on a comparable-risk
bond is 10 percent.
a. Compute the bond's yield to maturity.
b. Determine the value of the bond to you, given your required
rate of return.
c. Should you purchase the bond? a. What is your yield...

1, How much would you pay to receive a 15-year bond with a par
value of $1,000 and a 12 percent coupon rate?
2, How would you go about valuing XYZ Company?

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