Question

Fox Chapel Company wishes to issue $400,000 of 5-year, 6% bonds, with interest paid annually at...

Fox Chapel Company wishes to issue $400,000 of 5-year, 6% bonds, with interest paid annually at the end of the year. The market rate of interest is currently 5%. What information is needed in order to determine the selling price?

a.The face amount of the bonds, the purpose of the issue, the bond rating, and the bond life.

b.The life of the bonds, the market rate of interest, the bond rating, and the face amount of the bonds.

c.The face amount of the bonds, the stated rate of interest, the market rate of interest, and the bond life.

d.The face amount of the bonds, the market rate of interest, the purpose of the issue, and the bond life.

Bennington Corp. issued a $40,000, 10-year bond at the face rate of 8%, paid semiannually. How much cash will the bond investors receive at the end of the first interest period?

a.$4,000

b.$3,200

c.$800

d.$1,600

Bonds in the amount of $100,000 and a life of 10 years were issued by the Focus Company. If the face rate is 6% and interest is paid semiannually, what would be the total amount of interest paid over the life of the bonds?

a.$30,000

b.$6,000

c.$60,000

d.$120,000

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1


1.

Correct option is > c. The face amount of the bonds, the stated rate of interest, the market rate of interest, and the bond life.

For calculating bond price, we don’t need purpose of bond issuance and rating of bond.

2.

Correct option is > d. $1,600

First payment = Coupon/2 x Value of bond = 8%/2 x 40000 = $1600

3.

Correct option is > c. $60,000

Total amount of interest paid = Interest rate x Value of bond x Total life

Total amount of interest paid = 6% x 100000 x 10 = $60,000

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
When determining the amount of interest to be paid on a bond, which of the following...
When determining the amount of interest to be paid on a bond, which of the following information is not necessary? a.The length of the interest period, annually or semiannually. b.The face rate of interest on the bonds. c.The selling price of the bonds. d.The face amount of the bonds. Which of the following statements is correct? a.The market rate of interest has no bearing on the selling price of the bonds. b.The actual issue price of a bond represents the...
Hinton Company issued $ 325, 000 $325,000​, 6​%, ten​-year bonds for 112​, with interest paid annually....
Hinton Company issued $ 325, 000 $325,000​, 6​%, ten​-year bonds for 112​, with interest paid annually. Assuming​ straight-line amortization, what is the carrying value of the bonds after one​ year? A. $367,900 B. $362,050 C. $360,100 D. $364,000 Bonds with an​ 8% stated interest rate were issued when the market rate of interest was​ 5%. This bond was issued at A. premium B. par value C. discount D. face value Bolton Corporation issued $ 2,500,000 $2,500,000​, 5​-year, 5​% bonds for...
Holly Company issued $1,500,000, 8%, 10-year, bonds. Interest to be paid semiannually. The market rate on...
Holly Company issued $1,500,000, 8%, 10-year, bonds. Interest to be paid semiannually. The market rate on bonds issue date was 6%. Q1. Provide the journal that must be made on issue date of the bonds Q2. Complete partial Schedule in the space provided on the Answers Sheets Q3. Provide the necessary journal entry that company must make for 2nd interest payment on the bond
Ultimate Butter Popcorn issues 6%, 10-year bonds with a face amount of $56,000. The market interest...
Ultimate Butter Popcorn issues 6%, 10-year bonds with a face amount of $56,000. The market interest rate for bonds of similar risk and maturity is 7%. Interest is paid semiannually. At what price will the bonds issue?
ABC issues 6%, 10 year bonds with a face amount of $100,000. The market interest rate...
ABC issues 6%, 10 year bonds with a face amount of $100,000. The market interest rate for bonds of similar risk and maturity is 4%. Interest is paid semiannually. At what price will the bonds issue? 116,222 116,351 117,155 116,024 115,873
On January 1, the Mayes Company issued $400,000 of 6%, 6-year bonds when the market rate...
On January 1, the Mayes Company issued $400,000 of 6%, 6-year bonds when the market rate of interest was 8%. The bonds pay interest semiannually on June 30 and December 31. How much are the proceeds that Ryan will receive from the bond issue date? Select one: A. $360,032 B. $280,400 C. $362,460 D. $399,800
BECCA COMPANY is considering the issue of $102,000 face value, ten-year term bonds. The bonds will...
BECCA COMPANY is considering the issue of $102,000 face value, ten-year term bonds. The bonds will pay 6% interest each December 31. The current market rate is 6%; therefore, the bonds will be issued at face value. Required: 1. For each of the following situations, indicate whether you believe the company will receive a premium on the bonds or will issue them at a discount or at face value. a. Interest is paid semiannually instead of annually. Face value b....
On January 1, Yankee Company issued $100,000 par​ value, 4%​, 5​-year bonds​ (i.e., there were 100...
On January 1, Yankee Company issued $100,000 par​ value, 4%​, 5​-year bonds​ (i.e., there were 100 of $1,000 par value bonds in the​ issue). Interest is payable semiannually each January 1 and July 1 with the first interest payment due at the end of the period on July 1. Yankee paid $10,000 in underwriting fees. Determine the issue price of the bonds with a 12% market rate of interest and prepare the journal entry to record the bond issue. The...
Activation Exercise 12-1: Bonds Issued at a Discount Terms and Definitions The interest rate paid on...
Activation Exercise 12-1: Bonds Issued at a Discount Terms and Definitions The interest rate paid on the face amount of a bond is called the of interest. The interest rate paid on similar risk bonds is called the of interest. When the contract rate of interest is less than the market rate of interest, the bonds will sell for their face value. The difference between the selling price and the face amount of the bonds in this case is called...
Calculating Bond Issue Price On December 31, 2018, University Theatres issued $500,000 face value of bonds....
Calculating Bond Issue Price On December 31, 2018, University Theatres issued $500,000 face value of bonds. The stated rate is 8%, and interest is paid semiannually on June 30 and December 31. The bonds mature in 15 years. Required: a. Assuming the market rate of interest is 6%, calculate at what price the bonds are issued. $ b. Assuming the market rate of interest is 10%, calculate at what price the bonds are issued. $
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT