In January 1 20x1 abc company issued a 1000000 10 year bond with a stated interest rate of 9% payable annually every December 31st the market interest rate is 7% the bonds price is 1140160. entsnectprincipal when the bondis paid off?c) Was the bond sold at adiscount or at apremium?d) How much was thediscount (or premium) atissuance?e) How much cash will itpay for interest onDecember 31, 20X1?f) If they use straight-lineamortization, how muchof the discount (orpremium) will beamortized each year?[Choose ][Choose ][Choose ][Choose ]II Examity Proctoring is sharing your screen. Stop sharingHide

Bond is a fixed instrument loan made by an investor to the borrower, usually by corporates and…

Answered: In January 1 20x1 abc company issued a…

In January 1 20x1 abc company issued a 1000000 10 year bond with a stated interest rate of 9% payable annually every December 31st the market interest rate is 7% the bonds price is 1140160.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter11: Notes, Bonds, And Leases

Section: Chapter Questions

Problem 3Q

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Question

In January 1 20x1 abc company issued a 1000000 10 year bond with a stated interest rate of 9% payable annually every December 31st the market interest rate is 7% the bonds price is 1140160.

ents
nect
principal when the bond
is paid off?
c) Was the bond sold at a
discount or at a
premium?
d) How much was the
discount (or premium) at
issuance?
e) How much cash will it
pay for interest on
December 31, 20X1?
f) If they use straight-line
amortization, how much
of the discount (or
premium) will be
amortized each year?
[Choose ]
[Choose ]
[Choose ]
[Choose ]
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Definition Definition Calculates the present value of a bond's expected future periodic coupon payments. Bond valuation determines the theoretical fair value of a particular bond and helps investors estimate what rate of return they could expect. The bond's theoretical fair value is computed by discounting the future cash flows or coupon payments by an applicable discount rate.

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