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- On July 1, Somers Inc. issued $300,000 of 10%, 10-year bonds when the market rate was 12%. The bonds paid interest semi-annually. A. Assuming the bonds sold at 64.55, what was the selling price of the bonds? B. Explain why the cash received from selling this bond is different from the $300,000 face value of the bond. Investors can earn a in other similar bonds so the bond sells at aOn July 1, Somers Inc. issued $200,000 of 10%, 10-year bonds when the market rate was 12 %. The bonds paid interest semi-annually. A. Assuming the bonds sold at 59.55, what was the selling price of the bonds? B. Explain why the cash received from selling this bond is different from the $200,000 face value of the bond. Investors can earn a higher rate ✓ in other similar bonds so the bond sells at a discountCalculate the cash price of the following bond, sold on September 21: par = $1,000; coupon rate = 6 percent, paid on January 1 and July 1; quoted price = $964. (Round answer to 2 decimal places, e.g. 1564.25.) Cash price $ LA
- Calculate the cash price of the following bond, sold on September 21: par = $1,000; coupon rate = 6 percent, paid on January 1 and July 1; quoted price = $945. (Round answer to 2 decimal places, e.g. 1564.25.) $ Cash priceWhat is the yield to maturity of the August 2000 Treasury bond? % (Round to three decimal places.)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 +
- a. Assume that the market interest rates were slightly higher than 9% when the bonds were sold. Would the proceeds from the bond issue have been more than, less than, or equal to the face amount? Explain. b. Independent of your answer to part a, assume that the proceeds were $14,820,000. Use the horizontal model (or write the journal entry) to show the effect of issuing the bonds. C. Calculate the interest expense that Coley Co. will show with respect to these bonds in its income statement for the fiscal year ended September 30, 2013, assuming that the discount of $180.000 is amortized on a straight-line basis.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.At one point, some Treasury bonds were callable. Consider the prices on the following three Treasury issues as of May 15, 2019: 7.15 May 23 114.37500 114.43750 8.90 May 23 111.50000 111.56250 147.65625 147.84375 12.65 May 23 -.43750 5.41 - 18750 5.37 -.50000 5.45 The bond in the middle is callable in February 2020. What is the implied value of the call feature? Assume a par value of $1,000. (Hint: Is there a way to combine the two noncallable issues to create an issue that has the same coupon as the callable bond?) (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Call value
- 1. On July 1, Somerset Inc. issued $200,000 of 10%, 10-year bonds when the market rate was 12%.The bonds paid interest semi-annually. Assuming the bonds sold at 58.55, what was the selling price of thebonds? Explain why the cash received from selling this bond is different from the $200,000 face value of thebond. A 25,000 4% bond with interest payable annually will mature on May 1, 1998. The date ofpurchase is July 1, 1988 to yield 3 ½% m=1. Find the purchase price of the bond on July 1,1988. (Bonds between dates)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 be