neat and clean answer needed Calculate the purchase price of the $1,000 face value bond using the information given below. (Round your answer to the nearestcent.)Purchase date Coupon rate (%) Market rate (%)July 1, 2015Issue dateMaturity dateJan 1, 2027Jan 1, 20077.33.8Assume that:• Bond interest is paid semiannually.• The bond was originally issued at its face value.• Bonds are redeemed at their face value at maturity.• Market rates of return are compounded semiannually.Bond price2$

Par value (FV) = $ 1000 Coupon rate = 7.3% Semi annual coupon amount (C) = 1000*0.073/2 = $ 36.50…

Calculate the purchase price of the $1,000 face value bond using the information given below. (Round your answer to the nearest cent.) Maturity date Jan 1, 2027 Purchase date Coupon rate (%) Market rate (%) July 1, 2015 Issue date 7.3 3.8 Jan 1, 2007 Assume that: • Bond interest is pald semiannually. • The bond was originally Issued at its face value. • Bonds are redeemed at their face value at maturity. • Market rates of return are compounded semiannually. Bond price 24

Calculate the purchase price of the $1,000 face value bond using the information given below. (Round your answer to the nearest cent.) Maturity date Jan 1, 2027 Purchase date Coupon rate (%) Market rate (%) July 1, 2015 Issue date 7.3 3.8 Jan 1, 2007 Assume that: • Bond interest is pald semiannually. • The bond was originally Issued at its face value. • Bonds are redeemed at their face value at maturity. • Market rates of return are compounded semiannually. Bond price 24

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter11: Notes, Bonds, And Leases

Section: Chapter Questions

Problem 17E

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On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?
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.
a. Reset the Data Section to its initial values. The price of this bond is 1,407,831. What would it be if there were only 9 or 8 years to maturity? Use the worksheet to compute the bond issue prices and enter them in the spaces provided. Bond issue price (9 years to maturity) __________________ Bond issue price (8 years to maturity) __________________ b. Compare these prices to the bond-carrying values found in the effective interest amortization schedule you originally printed out in requirement 3. Explain the similarity. c. Click the Chart sheet tab. The chart presented shows the price behavior of this bond based on years to maturity. Explain what effect years to maturity has on bond prices. Check your explanation by trying 8% as the effective rate (cell E10) and clicking the Chart sheet tab again. Also try 9%. When the assignment is complete, close the file without saving it again. Worksheet. Modify the BONDS3 worksheet to accommodate bonds with up to 20-year maturity. Use your new model to determine the issue price and amortization schedules of a 2,000,000, 18-year, 10% bond issued to yield 9%. Preview the printout to make sure that the worksheet will print neatly, and then print the worksheet. Save the completed file as BONDST. Hint: Expand both amortization schedules to 20 years. Expand the scratch pad to 20 years. Modify FORMULA1 in cell F17 to include the new ranges. Chart. Using the BONDS3 file, prepare a line chart that plots annual interest expense over the 10-year life of this bond under both the straight-line and effective interest methods. No Chart Data Table is needed. Put A23 to A32 in the Label format and then select A23 to A32, D23 to D32, and B40 to B49 as a collection. Enter all appropriate titles, legends, formats, and so forth. Enter your name somewhere on the chart. Save the file again as BONDS3. Print the chart.
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.