A corporate bond pays 5% of its face value once per year. If this $5,000 10-year bond sells now for $5,500, what yield will be earned on this bond Assume the bond will be redeemed at the end of 10 years for $5,000.

A corporate bond pays 5% of its face value once per year. If this $5,000 10-year bond sells now for $5,500, what yield will be earned on this bond Assume the bond will be redeemed at the end of 10 years for $5,000.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 13Q: A company issued bonds with a $100,000 face value, a 5-year term, a stated rate of 6%, and a market...

See similar textbooks

Related questions

Q: Abner Corporation's bonds mature in 24 years and pay 15 percent interest annually. If you purchase…

A: Price of bond = $ 1050 Years to maturity = 24 Par value = $ 1000 Coupon rate = 15% Annual coupon…

Q: Bonds purchased for $9,000 have a face value of $10,000 and interest is 10% per year, payable…

A: As we all are aware of that, The rate of return is the difference between the final value,…

Q: A mortgage bond issued by Automation Engineering is for sale for $8,700. The bond has a face value…

A: Introduction Yield To maturity: Simply means the rate of return the investors can expect on a bond…

Q: ACT has an outstanding bond with a face value ( principal) of 1,000which would mature in 10 years.…

A: Current market value = present value of all future cash flows Here FV = 1000; nper (or time…

Q: A bond has a face value of 2,000 $ is redeemable in 8 years, and pays interest of 200 $ at the end…

A: A bond is borrowing security that is issued by the company in order to raise funds from the market…

Q: The saleemi corporation’s $1,000 bonds pay 6 percent interest annually and have 11 years until…

A: Yield to maturity can be calculated by following function in excel =RATE (nper, pmt, pv, [fv],…

Q: A $1,000 face value bond issued by the Purud Company currently pays total annual interest of $80 per…

A: In financial calculator: Enter FV = 1000 Enter n = 13 (life of the bond) Enter PMT = 80 (interest)…

Q: A $3,500,000 issue of a 30-year bond, redeemable at par, offers 9.00% coupons payable semi-annually.…

A: The question is based on the concept of Financial Accounting.

Q: gage bond issued by Automation Engineering is for sale for $8,900. The bond has a face value of…

A: Face value =10000 Market price =8900 Coupon =5% MATURITY =9 years Could =500 Annual

Q: our yield to maturity on the Abner bonds is _____%.(Round to two decimal places.)

A: Information Provided: Years to maturity = 16 Coupon Interest Rate = 12% Bond price = $800 Par Value…

Q: An investor purchases a bond 6 months after the issue. The bond will be redeemed at 105% eight years…

A: Price of a bond = present value of its future cashflows, let the purchase price be = P Hence, P =…

Q: A well-known industrial firm has issued $990 bonds that carry 4% nominal annual interest paid…

A: Bonds refer to the financial instruments which are used by the financial institutions for raising…

Q: Abner Corporation's bonds mature in 21 years and pay 13 percent interest annually. If you purchase…

A: A bond is a debt instrument that is issued by the organization to raise the funds from the investor…

Q: The saleemi corporation’s is $1,000 bonds pay 9 percent interest rate annually and have 9 years…

A: Yield to maturity Yield to maturity refers to the total rate of return anticipated on a bond if held…

Q: A bond pays dividends of $110 at the end of each year. If the bond matures in 20 years, what is the…

A: Annual dividends (D) = $110 Duration (n) = 20 years Interest rate (r) = 12% Bond price = 1546 Let…

Q: Woodland Company issues bonds with a face value of $375,000 that pay 4% interest semiannually and…

A: First of all we will find the price of the bond with 4% market interest rate. We can find the price…

Q: ABC Manufacturing issues a $100,000 face value bond at a discount of $92,788, 5-year maturity, 10%…

A: Bond are issued at a discount to their face value when the market interest rates are higher than the…

Q: A $15,000, 5.5% bond is purchased 10.5 years before maturity to yield 8% compounded annually. If the…

A: Bond is a debt instrument issued by companies and government. It is a fixed income instrument which…

Q: Abner Corporation's bonds mature in 23 years and pay 11 percent interest annually. If you purchase…

A: Face Value = $1000 (Assumed) Maturity = 23 years Coupon rate = 11% Coupon amount = $1000*11% = $110…

Q: A company issues a $100,000 bond due in 4 years paying 7 percent interest annually at year- end.…

A: We require to calculate the present value of bond in this question. We can calculate the present…

Q: One hundred $1,000 bonds having bond rates of 8% per year payable annually are available for…

A: Bond valuation is done through the concepts of present value. The value of the bond is the present…

Q: Blossom Corporation is about to issue $ 1,260,000 of 10-year bonds that pay a 6% annual interest…

Q: ssue price of the bond

Q: A corporate bonds has a face value of $1000 with maturity date 20 years from today. The bond pays…

A: The current interest rate is compared to the rate of interest indicated on the bond to compute the…

Q: ABC Corporation’s recently issued bonds paying interest semiannually and maturing in 10 years. The…

A: Corporate bond-It is a bond issued by a company to fund its business operations, major expansions,…

Q: The Saleemi Corporation's $1,000bonds pay 5 percent interest annually and have 13 years until…

A: A. Yield to maturity = [Interest +(Maturity value - Purchase Price)/number of years of…

Q: Determine the present worth if the bond pays 12% compounded annually?

A: The present worth can be found using the PV Function in excel. PV = (RATE, NPER, -PMT, -FV, 0) RATE…

Q: A corporate bond with a face (par) value of $10,000 will mature 7 years from today (it was issued 3…

A: A financial instrument with a fixed cost that helps a company to raise funds for business operations…

Q: A company has issued 10-year bonds, with a face value of $1,000,000 in 1,000 dollar units. Interest…

A: A Bond is an instrument that represents the loan that is made by the investor to the company and…

Q: An investor is considering buying a 20-year corporate bond. The bond has a face value of $1000 and…

A: Corporate bond-It is a bond issued by a company to fund its business operations, major expansions,…

Q: Company 'A' issues a bond at $1,000 and offers a payment of $50/year every year for 3 years. If the…

A: Current yield of the bond can be calculated by using the online financial calculator. Current market…

Q: A bond promises to pay you $7,000.00 in 10 years. If you are able to earn 6 percent on securities of…

A: Present Value can be calculated using PV function in excel PV (rate, nper, pmt, [Fv], [type])…

Q: The Saleemi Corporation's $1,000 bonds pay 5 percent interest annually and have 13 years until…

A: Bonds are long-term financing debt. It is a company that raises funds for its business. In return, a…

Q: A Php 50,000 bond with rate of 8% annually pays dividend quarterly is redeemable at par at the end…

Q: Johnson Corporation plans to obtain financing with a $1,000,000 bond issue that has a term of 10…

A: Given, Face Value = $1,000,000 years = 10 Coupon Rate =7% Semi annual bond

Q: corporation’s bonds mature in 23 years and pay 7 percent interest annually. If you purchase the…

A: The given problem can be solved using RATE function in excel. RATE function computes yield to…

Q: Ten bonds are purchased for $9,598.13 and are kept for 5 years. The bond coupon rate is 7% per year,…

A: Purchase price of the bond is $9,598.13. Coupon rate 7% Yield is 9% term is 5 years

Q: What would be the selling price of a 10-year bond with face value of 100,000, interest at 20% which…

A: Face value = 100000 The bond pays quarterly interest Coupon = (20% of 100000) / 4 = 5000 Interest…

Q: One hundred $1,000 bonds having a bond rate of 8% per year payabie quarterly are purchased for…

A: The following formula will be used:

Q: Fitzgerald's 15-year bonds pay 6 percent interest annually on a $1,000 par value. If the bonds…

A: Here, To Find: Yield to maturity of bonds annually and semi-annually and the difference between the…

Q: MJI Corporation bonds mature in 6 years and have a yield to maturity of 8.5 percent. The par value…

A: Given, Face Value (FV)=$1,000No. of paymrnts (n)=6×2=12Payment (pmt)=$1,000×10%×12=$50Rate…

Q: A corporate bond has a face value of $10,000, a bond interest rate of 8% per year payable…

A: A bond is a fixed income instrument that represents a loan made by an investor to a borrower…

Q: A corporate bond with a face (par) value of $10,000 will mature 7 years from today (it was issued 3…

A: Formula to calculate yield to maturity:YTM=C+FV-PVnFV+PV2×100r= rate of returnC= Coupon paymentn=…

Q: A ten-year 3% bond with semiannual coupons is purchased to yield 6% compounded semiannually. The par…

A: Par value (FV) = 1000 Coupon rate = 3% Semi annual coupon amount (C) = 1000*0.03/2 = 15 Years to…

Q: The Saleemi Corporation's $1,000 bonds pay 6 percent interest annually and have 14 years until…

A: Par value (FV) = $ 1000 Coupon rate = 6% Coupon amount (C) = 1000*0.06 = $ 60 Years to maturity = 14…

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

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?
A company issued bonds with a $100,000 face value, a 5-year term, a stated rate of 6%, and a market rate of 7%. Interest is paid annually. What is the amount of interest the bondholders will receive at the end of the year?
Neubert Enterprises recently issued $1,000 par value 15-year bonds with a 5% coupon paid annually and warrants attached. These bonds are currently trading for $1,000. Neubert also has outstanding $1,000 par value 15-year straight debt with a 7% coupon paid annually, also trading for $1,000. What is the implied value of the warrants attached to each bond?
On July 1, a company sells 8-year $250,000 bonds with a stated interest rate of 6%. If interest payments are paid annually, each interest payment will be ________. A. $120,000 B. $60,000 C. $7,500 D. $15,000
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 the bonds? Explain why the cash received from selling this bond is different from the $200,000 face value of the bond.
Issue Price The following terms relate to independent bond issues: 500 bonds; $1,000 face value; 8% stated rate; 5 years; annual interest payments 500 bonds; $1,000 face value; 8% stated rate; 5 years; semiannual interest payments 800 bonds; $1,000 face value; 8% stated rate; 10 years; semiannual interest payments 2,000 bonds; $500 face value; 12% stated rate; 15 years; semiannual interest payments Required Assuming the market rate of interest is 10%, calculate the selling price for each bond issue.