HWK #9 SS23 Solution
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Michigan State University *
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311
Subject
Accounting
Date
Feb 20, 2024
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xlsx
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6
Uploaded by nathangardner35
Part A (1) Determine the proceeds of the bond sale on 1/1/2023
Face value
3,000,000 Bond rate
10%
Effective interest 8%
Coupon payment
300,000 Payment period
6
PV
$3,277,372.78 (2) Calculate present value of the bond by using present value tables
Step1: Layout of the payment
Time
12/31/2023
12/31/2024
12/31/2025
Coupon payment
300,000 300,000 300,000 Principal payment
Step2 : Find the discount factor by using the table and perform calculation PV of principal
1,890,600.00 i
PV of coupon
1,386,870.00 i
Sum of PV
3,277,470.00 Difference due to rounding
97.22 (3) Did the bond sell at the premium or discount?
The bond is sold at premium. We can tell this by (1) comparing the face value of the bond to th
(4) Produce amortization schedule
Year
Interest Expense
Coupon payment
Amortized premium
1/1/2023
12/31/2023
$262,189.82 300,000 $37,810.18 12/31/2024
$259,165.01 300,000 $40,834.99 12/31/2025
$255,898.21 300,000 $44,101.79 12/31/2026
$252,370.07 300,000 $47,629.93 12/31/2027
$248,559.67 300,000 $51,440.33 12/31/2028
$244,444.44 300,000 $55,555.56 Total
$1,522,627.22 1,800,000 $277,372.78 $3,277,372.78 $3,000,000.00
(5) Journal entries
(1) Initial Sale Cash
3,277,372.78 Premium on B/P
277,372.78 Bond payable
3,000,000.00 (2) First interest payment
Interest Expense
262,189.82 Premium on B/P
37,810.18 Cash 300,000.00 (3) Payment at maturity
Interest Expense
$244,444.44 Premium on B/P
$55,555.56 Cash 300,000.00 $300,000.00 Bond payable 3,000,000.00 Cash $3,000,000.00 (6) T Account
Date
Bond 1/1/2022
3,000,000.00 Bond Premium
277,372.78
37,810.18 $40,834.99 198,727.61 Net bond Payable as of 12/31/2024
$3,198,727.61
12/31/2026
12/31/2027
12/31/2028
300,000 300,000 300,000 3,000,000 0.6302
Using present value table with r=8% and n=6
4.6229
Using annuity table with r=8% and n=6
he present value or (2) comparing bond rate to effective rate Book value of bond
$3,277,372.78 <----This is the PV of the bond at issuance
$3,239,562.60 $3,198,727.61 $3,154,625.82 $3,106,995.88 $3,055,555.56 $3,000,000.00 Amortization (Credit)
<----Double checking the total amortization amount
Tie out
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Related Questions
Please answer in typing format
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aj.4
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Problem 6-4 (LG 6-2)
On October 5, 2022, you purchase a $10,000 Treasury-note that matures on August 15, 2031 (settlement occurs one day after
purchase, so you receive actual ownership of the bond on October 6, 2022). The coupon rate on the Treasury-note is 4.380 percent
and the current price quoted on the bond is 105.40625 percent. The last coupon payment occurred on May 15, 2022 (144 days before
settlement), and the next coupon payment will be paid on November 15, 2022 (40 days from settlement).
a. Calculate the accrued interest due to the seller from the buyer at settlement.
b. Calculate the dirty price of this transaction.
(For all requirements, do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))
Amount
a. Accrued interest due
ces
b. Dirty price
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Give typing answer with explanation and conclusion
1- Imagine the bond above displayed the following details: $10,000 Matures: January 31, 2030; Interest of $200 payable June 30 and December 31 of each year. Can you calculate the annual effective interest rate for this bond?
a)2%
b)4%
c)6%
d)One cannot tell.
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2 parts a-c
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Question a
The following data relate to a corporate bond which pays coupons semi-annually:Settlement date 01 March 2020Maturity date 31 December 2040Coupon rate 12%Yield to maturity 10%Face value $1,000Percentage of face value paid back to the investor on maturity 100%Using the above data, calculatei. The flat price of the bondii. Accrued interestiii. Invoice price of the bond
Full explain this question and text typing work only We should answer our question within 2 hours takes more time then we will reduce Rating Dont ignore this line. .
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"Please answer the questions in excel format"
please provide detailed solution and give the explanation of the concept
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Only typing answer
Please answer explaining in detail step by step without table and graph thankyou
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bed
ok
nt
ences
Problem 3-10 (LG 3-2)
Calculate the yield to maturity on the following bonds:
a. A 9.4 percent coupon (paid semiannually) bond, with a $1,000 face value and 19 years remaining to maturity. The bond is selling at
$965.
b. An 8.4 percent coupon (paid quarterly) bond, with a $1.000 face value and 10 years remaining to maturity. The bond is selling at
$901.
c. An 11.4 percent coupon (paid annually) bond, with a $1,000 face value and 6 years remaining to maturity. The bond is selling at
$1,051.
(For all requirements, do not round intermediate calculations. Round your percentage answers to 3 decimal places. (e.g., 32.161))
Yield to maturity
b. Yield to maturity
Yield to maturity
a
C.
% per year
% per year
% per year
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2.1.4 Bonds and obligations: Exercise 12
Find the value on 15th January 2012 of a bond with a face value of €1,000
which pays annual coupons of €52 on every 15th December and a
maturity date of 15th December 2021. Also, suppose that:
12.a) The required market yield on 15/Jan/12 is 5%;
12.b) The required market yield on 15/Jan/12 is 5.25%;
12.c) The required market yield on 15/Jan/12 is 5.5%.
From your answers to sections a) to c), what can you say about the
relationship between the price of the bond and the required yield?
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Q1
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TABLE 3.9
END-OF-YEAR PAYMENTS
Bond A
Bond B
Bond C
Bond D
Year 1
100
50
0+1,000
Year 2
Year 3
100
50
100 +1,000
50+1,000
0+ 1,000
Consider the four bonds having annual payments as shown in Table 3.9. All of the bonds have a 15%
yield.
Which bond has the highest price?
Bond A
Bond B
Bond C
Bond D
O ooO
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Using Table 2 (PV$1), find the Present Value (PV) Factor used to calculate the PV of the lump sum bond payment for this bond: Bond
#1 Face Value $100 Stated Rate = 8% Market Rate = 6% Time to Maturity = 5-Years Quarterly Payments
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2
3
Į
Using Excel functions to compute duration
Bond duration
Settlement date
Maturity date
Coupon rate (decimal)
YTM
Coupons per year
Macaulay duration
Modified duration
7/20/2020
7/20/2023
8.00%
10.00%
1
%
=DURATION
=MDURATION
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Related to Checkpoint 9.2) (Yield to maturity) The Saleemi Corporation's
$1,000
bonds pay
8
percent interest annually and have
15
years until maturity. You can purchase the bond for
$1,075.
a. What is the yield to maturity on this bond?
b. Should you purchase the bond if the yield to maturity on a comparable-risk bond is
6
percent?
Question content area bottom
Part 1
a. The yield to maturity on the Saleemi bonds is
enter your response here%.
(Round to two decimal places.)
Part 2
b. You
▼
should
should not
purchase the bonds because your yield to maturity on the Saleemi bonds is
▼
greater
less
than the one on a comparable risk bond. (Select from the drop-down menus.)
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Exercise 1 (It's only one question)What is the price displayed in specialized newspapers for the following bonds March 19, 2020, (the semi-annual coupon)?
Name of the society
Coupon rate
The price in %
Yield to maturity
Date of issue
Due date
TMS
8%
?
11%
January 04,2005
January 04,2030
FLK
5%
?
14%
April 16,2009
April 16,2024
BBL
12%
?
10%
October 19,2012
October 19,2032
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Question 8
Data:
Face amount of bond: 10 000$
Purchase date: 7/1/89
Maturity value: 11 000$
Maturity date: 12/31/94
Coupon rate: 6% per year, compounded semiannually
Coupon dates: 6/30 and 12/31
Purchaser's yield to maturity: 8% per year, compounded semiannually
Question: In what range is the purchase price of the bond?
А.
Less than 9 400
В.
9 400, but less than 9 800
С.
9 800, but less than 10 200
D.
10 200 but less than 10 600
Е.
10 600 or more
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TABLE 3.9
END-OF-YEAR PAYMENTS
Year 1
Year 2
Year 3
Bond B
Bond C
Bond A
Bond A
100
100
100 + 1,000
Consider the four bonds having annual payments as shown in Table 3.9. All of the
bonds have a 15% yield.
Which bond has the highest price?
Bond D
Bond B
50
50
50 + 1,000
Bond C
0
0
0 + 1,000
Bond D
0 + 1,000
0
0
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* Assignment 3 i
Assume coupons are paid annually. Here are the prices of three bonds with 10-year maturities. Assume face value is $100.
Bond Coupon
(%)
248
a. What is the yield to maturity of each bond?
b. What is the duration of each bond?
Price (%)
80.36
96.95
135.22
Complete this question by entering your answers in the tabs below.
Required A
Bond Coupon
(%)
2
4
8
Required B
What is the yield to maturity of each bond?
Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.
YTM
%
%
%
Saved
22255
35445
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What is assumed the be the face value aka par value aka principal aka loan amount of a bond?
It's also assumed to be a bond's FV.
10%
$0
$100
$1,000
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Hello tutor please provide Solutions with explanation
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PROBLEM 25
Lord Corporation acquired bonds with a face value of P3,000.000 for P2,800,000 on
January 1, 2020. The bond has a stated interest of 10%, pays interest every December
31, and matures on December 31, 2022.
Requirements:
1. Prepare the necessary journal entries to record the above transactions.
2 How much is the investment in bonds on December 31, 2020?
3. Assuming that the bond is a serial bond and the P1,000.000 matures every
December 31. Prepare the journal entries to record the transactions.
4. The same information in No. 3, how much is the investment in bonds on December 31, 2020?
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Related Questions
- Please answer in typing formatarrow_forwardaj.4arrow_forwardProblem 6-4 (LG 6-2) On October 5, 2022, you purchase a $10,000 Treasury-note that matures on August 15, 2031 (settlement occurs one day after purchase, so you receive actual ownership of the bond on October 6, 2022). The coupon rate on the Treasury-note is 4.380 percent and the current price quoted on the bond is 105.40625 percent. The last coupon payment occurred on May 15, 2022 (144 days before settlement), and the next coupon payment will be paid on November 15, 2022 (40 days from settlement). a. Calculate the accrued interest due to the seller from the buyer at settlement. b. Calculate the dirty price of this transaction. (For all requirements, do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) Amount a. Accrued interest due ces b. Dirty pricearrow_forward
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- bed ok nt ences Problem 3-10 (LG 3-2) Calculate the yield to maturity on the following bonds: a. A 9.4 percent coupon (paid semiannually) bond, with a $1,000 face value and 19 years remaining to maturity. The bond is selling at $965. b. An 8.4 percent coupon (paid quarterly) bond, with a $1.000 face value and 10 years remaining to maturity. The bond is selling at $901. c. An 11.4 percent coupon (paid annually) bond, with a $1,000 face value and 6 years remaining to maturity. The bond is selling at $1,051. (For all requirements, do not round intermediate calculations. Round your percentage answers to 3 decimal places. (e.g., 32.161)) Yield to maturity b. Yield to maturity Yield to maturity a C. % per year % per year % per yeararrow_forward2.1.4 Bonds and obligations: Exercise 12 Find the value on 15th January 2012 of a bond with a face value of €1,000 which pays annual coupons of €52 on every 15th December and a maturity date of 15th December 2021. Also, suppose that: 12.a) The required market yield on 15/Jan/12 is 5%; 12.b) The required market yield on 15/Jan/12 is 5.25%; 12.c) The required market yield on 15/Jan/12 is 5.5%. From your answers to sections a) to c), what can you say about the relationship between the price of the bond and the required yield?arrow_forwardQ1arrow_forward
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