A Corporation sold an issue of 15-year bonds, having a total face value of P12,000,000 for P11,000,000. The bonds bear interest at 15%, payable semiannually. The company wishes to establish a sinking fund for retiring the bond issue and will make semiannual deposit that will earn 12%, compounded semiannually. Show the cash flow diagram, and compute the annual cost for interest and redemption of these bonds.
A Corporation sold an issue of 15-year bonds, having a total face value of P12,000,000 for P11,000,000. The bonds bear interest at 15%, payable semiannually. The company wishes to establish a sinking fund for retiring the bond issue and will make semiannual deposit that will earn 12%, compounded semiannually. Show the cash flow diagram, and compute the annual cost for interest and redemption of these bonds.
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 2PA: On July 1, Somerset Inc. issued $200,000 of 10%, 10-year bonds when the market rate was 12%. The...
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