| Six years ago the Templetion Company, issued 18- year bonds with a 14% anual Coupon rate at their $1,000 par value. The bonds had a 9% call premium, with years of call protection. Today Templetion called the bonds. Compute the realized rate of return for an investor who $S purchased the bonds when they were issued and held them until they were called an -

| Six years ago the Templetion Company, issued 18- year bonds with a 14% anual Coupon rate at their $1,000 par value. The bonds had a 9% call premium, with years of call protection. Today Templetion called the bonds. Compute the realized rate of return for an investor who $S purchased the bonds when they were issued and held them until they were called an -

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 3EA: Krystian Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the...

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Krystian Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the market rate was 6%. Interest was paid semi-annually. Calculate and explain the timing of the cash flows the purchaser of the bonds (the investor) will receive throughout the bond term. Would an investor be willing to pay more or less than face value for this bond?
Six years ago, The Singleton Company sold a 20-year bond issue with a 14 percent annual coupon rate and a 9 percent call premium. Today, Singleton called the bonds. The bonds originally were sold at their face value of $1,000. Compute the realized rate of return for investors who purchased the bonds when they were issued and who surrender them today in exchange for the call price.
Seven years ago the Templeton Company issued 20-year bonds with an11% annual coupon rate at their $1,000 par value. The bonds had a 7.5% call premium,with 5 years of call protection. Today Templeton called the bonds. Compute the realizedrate of return for an investor who purchased the bonds when they were issued and heldthem until they were called. Explain why the investor should or should not be happy thatTempleton called them.
Seven years ago the Templeton Company issued 27-year bonds with an 11% annual coupon rate at their $1,000 par value. The bonds had a 7.5% call premium, with 5 years of call protection. Today Templeton called the bonds. Compute the realized rate of return for an investor who purchased the bonds when they were issued and held them until they were called. Round your answer to two decimal places. ____ % Why should or should not the investor be happy that Templeton called them? Investors should be happy. Since the bonds have been called, interest rates must have risen sufficiently such that the YTC is greater than the YTM. If investors wish to reinvest their interest receipts, they can now do so at higher interest rates. Investors should be happy. Since the bonds have been called, investors will receive a call premium and can declare a capital gain on their tax returns. Investors should be happy. Since the bonds have been called, investors will no longer need to consider reinvestment…
Six years ago the Templeton Company issued 17-year bonds with a 14% annual coupon rate at their $1,000 par value. The bonds had a 9% call premium, with 5 years of call protection. Today Templeton called the bonds. Compute the realized rate of return for an investor who purchased the bonds when they were issued and held them until they were called. Round your answer to two
Seven years ago, Goodwynn & Wolf Incorporated (G&W) sold a 20-yearbond issue with a 14% annual coupon rate and a 9% call premium. Today,G&W called the bonds. The bonds originally were sold at their face value of$1,000. Compute the realized rate of return for investors who purchased thebonds when they were issued and who surrender them today in exchangefor the call price.
Six years ago the Templeton Company issued 19-year bonds with a 13% annual coupon rate at their $1,000 par value. The bonds had an 8% call premium, with 5 years of call protection. Today Templeton called the bonds. Compute the realized rate of return for an investor who purchased the bonds when they were issued and held them until they were called. Round your answer to two decimal places. % Why should or should not the investor be happy that Templeton called them? 1. Investors should be happy. Since the bonds have been called, investors will receive a call premium and can declare a capital gain on their tax returns. II. Investors should be happy. Since the bonds have been called, investors will no longer need to consider reinvestment rate risk. III. Investors should not be happy. Since the bonds have been called, interest rates must have fallen sufficiently such that the YTC is less than the YTM. If investors wish to reinvest their interest receipts, they must do so at lower interest…
7 years ago the Singleton Company issued 30-year bonds with a 12.5% annual coupon rate at their $1,000 par value. The bonds had a 7.5% call premium, with 3 years of call protection. Today Singleton called the bonds. Compute the realized rate of return for an investor who purchased the bonds when they were issued and held them until they were called. 12.50% 13.22% 7.50% 14.13% Jhy
Ten years ago the Templeton Company issued 28-year bonds with a 9% annual coupon rate at their $1,000 par value. The bonds had a 6% call premium, with 5 years of call protection. Today Templeton called the bonds. Compute the realized rate of return for an investor who purchased the bonds when they were issued and held them until they were called. Round your answer to two decimal places.
Seven years ago the Templeton Company issued 17-year bonds with an 11% annual coupon rate at their $1,000 par value. The bonds had a 6% call premium, with 5 years of call protection. Today Templeton called the bonds. Compute the realized rate of return for an investor who purchased the bonds when they were issued and held them until they were called. Round your answer to two decimal places.
Seven years ago the Templeton Company issued 25-year bonds with an 11% annual coupon rate at their $1,000 par value. The bonds had a 7.5% call premium, with 5 years of call protection. Today Templeton called the bonds. Compute the realized rate of return for an investor who purchased the bonds when they were issued and held them until they were called. Round your answer to two decimal places. % Why the investor should or should not be happy that Templeton called them. Since the bonds have been called, interest rates must have risen sufficiently such that the YTC is greater than the YTM. If investors wish to reinvest their interest receipts, they can now do so at higher interest rates. Since the bonds have been called, interest rates must have risen sufficiently such that the YTC is greater than the YTM. If investors wish to reinvest their interest receipts, they must do so at lower interest rates. Since the bonds have been called, investors will receive a call premium and can…
Seven years ago the Templeton Company issued 16-year bonds with an 11% annual coupon rate at their $1,000 par value. The bonds had a 7.5% call premium, with 5 years of call protection. Today Templeton called the bonds. Compute the realized rate of return for an investor who purchased the bonds when they were issued and held them until they were called. Round your answer to two decimal places. % Why should or should not the investor be happy that Templeton called them? I. Investors should be happy. Since the bonds have been called, investors will receive a call premium and can declare a capital gain on their tax returns. II. Investors should be happy. Since the bonds have been called, investors will no longer need to consider reinvestment rate risk. III. Investors should not be happy. Since the bonds have been called, interest rates must have fallen sufficiently such that the YTC is less than the YTM. If investors wish to reinvest their interest receipts, they must do so at lower…