A $500,000, ten year, 7% bond issue was sold to yield 6% interest payable annually. Actuarial information for 10 periods is as follows: present value $1 @ 7% = 0.50835 @ 6% = 0.55839 present value of an annuity of $1 @ 7% = 7.02359 @ 6% = 7.36009 The discount or premium at the date of bond issuance would be: A $500,000, ten year, 7% bond issue was sold to yield 6% interest payable annually. Actuarial information for 10 periods is as follows: present value $1 @ 7% = 0.50835 @ 6% = 0.55839 present value of an annuity of $1 @ 7% = 7.02359 @ 6% = 7.36009 The discount or premium at the date of bond issuance would be: A: $36,798 premium B: $10,097 discount C: $11,778 D:$35,117 discoun
A $500,000, ten year, 7% bond issue was sold to yield 6% interest payable annually. Actuarial information for 10 periods is as follows: present value $1 @ 7% = 0.50835 @ 6% = 0.55839 present value of an annuity of $1 @ 7% = 7.02359 @ 6% = 7.36009 The discount or premium at the date of bond issuance would be: A $500,000, ten year, 7% bond issue was sold to yield 6% interest payable annually. Actuarial information for 10 periods is as follows: present value $1 @ 7% = 0.50835 @ 6% = 0.55839 present value of an annuity of $1 @ 7% = 7.02359 @ 6% = 7.36009 The discount or premium at the date of bond issuance would be: A: $36,798 premium B: $10,097 discount C: $11,778 D:$35,117 discoun
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter22: Corporations: Bonds
Section: Chapter Questions
Problem 3MC
Related questions
Concept explainers
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
Question
A $500,000, ten year, 7% bond issue was sold to yield 6% interest payable annually. Actuarial information for 10 periods is as follows:
present value $1 @ 7% = 0.50835 @ 6% = 0.55839
present value of an annuity of $1 @ 7% = 7.02359 @ 6% = 7.36009
The discount or premium at the date of bond issuance would be:
A $500,000, ten year, 7% bond issue was sold to yield 6% interest payable annually. Actuarial information for 10 periods is as follows:
present value $1 @ 7% = 0.50835 @ 6% = 0.55839
present value of an annuity of $1 @ 7% = 7.02359 @ 6% = 7.36009
The discount or premium at the date of bond issuance would be:
A: $36,798 premium
B: $10,097 discount
C: $11,778
D:$35,117 discount
Expert Solution
Step 1
Answer: Correct option is A: $36,798 premium
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning