The Province of Ontario issued a $175 million face value bond on March 1, 1995, carrying a 9.5% coupon with 50 years until maturity. The matching sinking fund, with the payment rounded up to the next $100, is expected to earn 6.3% compounded semi-annually, and will retire the debt in full upon maturity. 1. Calculate the annual cost of the bond debt 2. Calculate the book value of the debt on September 1, 2015
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- On January 1, 2024, Tableau Company issues $20 million of 9% bonds, due in six years, with interest payable semiannually on June 30 and December 31 each year. Use a financial calculator or Excel. Required: 1. If the market rate is 8%, will the bonds issue at face amount, a discount, or a premium? Calculate the issue price. 2. If the market rate is 9%, will the bonds issue at face amount, a discount, or a premium? Calculate the issue price. 3. If the market rate is 10%, will the bonds issue at face amount, a discount, or a premium? Calculate the issue price. Help Save & (Do not round intermediate calculations. Round final answer to the nearest dollar amount. Enter your answer in dollars, not in millions.) 1. The bonds issue at 2. The bonds issue at 3. The bonds issue at and the issue price is and the issue price is and the issue price isABC Inc. plans to issue $500,000 face value bonds with a stated interest rate of 12% and market interest rate of 10%. They will mature in 10 years. Interest will be paid semiannually. At the date of issuance, compute the present value (bond issue price) of the future cash flows. Following are appropriate factors from tables: Table % / n Present Value of $1 Present Value of ordinary annuity of $1 10%/10 .38554 6.14457 12%/10 .32197 5.65022 5%/20 .37689 12.46221 6%/20 .31180 11.46992 Required Computation:A 12% Pl face value bond with interest payable June 30 and December 31, which matures on June 30, 2026, was purchased at 95 for short term investment purposes on June 30, 2021. At the end of December 31, 2021 , the bonds were quoted at 110. By June 30, 2022, all the bonds were sold at 115. How much would be the total cash that would be received by June 30, 2022? a.1,000,000 b.1,100,000 c.1,150,000 d.1,210,000
- Company I issues a $40,000,000 bond on January 1, 2020 with a coupon rate of 7%. The present value of the bond is $37,282,062 and the market rate of interest was 8%. The bond has a 10-year life and will make semiannual interest payments and will use the straight line amortization method. A) Is the bond issued at a face value, a discount, or premium? B) What is the amount of the semi-annual interest payments? C) What is the amount that will be recorded to interest expense each time an interest payment is made? D) What is the carrying value of the bond on December 31, 2021?A $10,000 bond with a coupon rate of 5% was redeemable on July 1, 2028. It was purchased on September 10, 2015 when the yield rate was 6% compounded semi- annually. Determine the purchase price of the bond. Paragraph IU ... Purchase Date: Redemption Date: 取 AOn January 1, 2024, Agricultural Credit Union (ACU) issued 6%, 20-year bonds payable with face value of $700,000. The bonds pay interest on June 30 and December 31. Read the requirements. Requirement 1. If the market interest rate is 5% when ACU issues its bonds, will the bonds be priced at face value, at a premium, or at a discount? Explain. ▼. They are in this market, so investors will pay The 6% bonds issued when the market interest rate is 5% will be priced at acquire them. Requirements C 1. If the market interest rate is 5% when ACU issues its bonds, will the bonds be priced at face value, at a premium, or at a discount? Explain. 2. If the market interest rate is 7% when ACU issues its bonds, will the bonds be priced at face value, at a premium, or at a discount? Explain. 3. The issue price of the bonds is 99. Journalize the following bond transactions: a. Issuance of the bonds on January 1, 2024. b. c. d. Payment of interest and amortization on June 30, 2024. Payment of interest…
- In May 2000, the U.S. Treasury issued 30-year bonds with a coupon rate of 6.25%, paid semi-annually. A bond with a face value of $1,000 pays $31.25 (1,000 × 0.0625 / 2) every six months for the next 30 years; in May 2030, the bond also repays the principal amount, $1,000. 1. What is the value of the bond if, immediately after issue in May 2000, the 30-year interest rate increases to 7.5%? 2. What is the value of the bond if, immediately after issue in May 2000, the 30-year interest rate decreases to 5.0%? 3. On a graph in Excel, show how the value of the bond changes as the interest rate changes (plot the value as a function of the interest rate). At what interest rate is the value of the bond equal to its face value of $1,000?Suppose a State of New Mexico bond will pay $1,000 eight years from now. If the going interest rate on these 8- year bonds is 5.5%, how much is the bond worth today? Oa. $792.02 Ob. $718.39 O c. $684.18 O d. $754.31 Oe. $651.60Fold in the Cheese, Inc. is issuing $850000 of 8% 10-year bonds. These bonds will pay semi-annual interest payments. The market interest rate is currently 6%. Required: Compute what your bonds are worth. Round all calculations to 2 decimals. Record the sale of the bond with a journal entry. Record the journal entry for your first interest payment.
- Suppose a State of New Jersey bond will pay $1,000 five years from now. If the going interest rate on these 10-year bonds is 4.1%, how much is the bond worth today? 1. $675.79 2. $817.99 3. $628.96 4. $749.39 5. $669.10b) Calculate the total amount of interest on interest earned five years from now if $100,000 is deposited into a bank account today that earns 5% interest per year. c) ABC Corporation issued at par $100 million semi-annual coupon-paying bonds on January 1, 2010. The bond's YTM at issuance was 8% (APR). The bond matures on January 1, 2020. i) Compute the market value of this bond on January 1, 2011 if it was priced to produce an effective semi-annual yield to maturity of 6% on that date. ii) Assume the bond is sold on January 1, 2011. Calculate the current yield and 1- year capital gains yield (CGY1-year). iii) Can the 1-year total yield be determined by the sum of current yield and capital gains yield? Explain your answer.A $1,000 face value bond issued by the Purdue Company currently pays total annual interest of $80 per year and has a 15-year life. a-What is the present value, or worth, of this bond if investors are willing to accept a 10 percent annual rate of return on bonds of similar quality bond? b. How would your answer change is the bond makes semi-annual payments? c-How would your answer in (a) change if, one year from now, investors only required a 6 percent annual rate of return on bond investments similar in quality to the Purdue bond? d-Suppose the original bond can be purchased for $925. What is the bond’s yield to maturity?