On January 1, 2020, ABC Corporation invested in P2,000,000 bonds of DEF Company that will mature on December 31, 2022. The bond has a coupon rate of 10% and a required rate of return of 12%. What is the value of the investment on January 1, 2020? *
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- Smashing Cantaloupes Inc. issued 5-year bonds with a par value of $35,000 and an 8% semiannual coupon (payable June 30 and December 31) on January 1, 2018, when the market rate of interest was 10%. Were the bonds issued at a discount or premium? Assuming the bonds sold at 92.288, what was the sales price of the bonds?On January 1, 2020, ABC Corporation invested in P2,000,000 bonds of DEF Company that will mature on December 31, 2022. The bond has a coupon rate of 10% and a required rate of return of 12%. What is the value of the investment on January 1, 2020.On November 10, 2022, the total market value of company “BellaLimited” is $49 million dollars. In the beginning of the year, the company issued a ten-year bond with a coupon rate of 12% that iscurrently trading at 1,125 dollars. The market ongoing rate ofinterest/discount rate is 8%. The CEO of the company isconsidering undertaking two solar projects namely, project“Lambda” that has a cost of $15,000 and is expected to producebenefits (e.g., cash flows) of $5,000 per year for five years andproject “EPSILON” that costs $24,000 and is expected to produce cash flows of $6,500 per year for five years. a. Calculate the two projects Internal Rate of Return and ProfitabilityIndices. b. Which project would be selected, assuming that are MutuallyExclusive, using each ranking method? c. Discuss in detail the advantages and disadvantages of the IRRcriterion. d. Which ranking criterion is better IRR or NPV? Carefully explainyour answer.
- GHI Company issued a 7-year bond on January 2, 2020, with a par value of $550,000 and pays its investors cash interest payments semi-annually ( every six months). The market rate for this bond is 6% and the coupon rate is 5%. What is the present par value (PV) of the Face Value? For this Bond?ABC company issued a new bond on January 1, 2018 which has an annual coupon rate of 9 percent, a par value of 1,000 dollar, and a maturity of 6 years. Coupon payments are made semi-annually (i.e., on June 30 th and December 31 st of each year). What was the percentage capital gain (or loss) on this bond on July 1, 2021 when the yield-to-maturity (YTM) on it was 8 percent (annually): -3.258 percent +3.258 percent -0.804 percent +8.804 percent -2.408 percentOn March 2022, ABC Co. is considering the issuance of $100 million 10-year bonds rated AAA. The issue will most likely be registered and sold some time in June. ABC Co. desires to hedge the pending issue using Treasury bond futures contracts each representing $100,000. In order to hedge the bond issue, ABC Co. musta. Sell 1,000 contractsb. Buy 1,000 contractsc. Sell 100 contractsd. Buy 100 contracts
- A $18,000 face value bond matures on August 3, 2024, and carries a coupon of 6.55%. It is sold on February 3, 2009, for $20,557.32. Determine the yield to maturity?On November 1, 2022, Colicchio Conglomerates sold $225,000,000 20-years bonds with a coupon rate of 5% paid semi-annually. The market rate for a security of similar risk and maturity is 6%. Colicchio Conglomerates hired Faulkner Investment Vehicles to issue the securities at a cost of 1.275% of the selling price of the security. Record journal entries for the issuance of the bond, the first two interest payments, and any required adjusting entries for Colicchio Conglomerates for the fiscal year ending December 31, 2022.Based on the pro-forma statements prepared in question 2, Insignia Corporation Limited will need external financing in 2021. As such the company is considering issuing a $100,000,000 15-year bond, with an annual coupon rate of 10%, and semi-annualinterest payments. Required i. If the company anticipates that the bond will close at a yield to maturity of12%, given the company’s credit ratings and current market conditions, how much would an investor be willing to pay for $1,000 face value of this bond? ii. Compute the current yield of the bond at this price (from i).
- Suppose Lion Cage Multinational floated 5000 bonds on January 1, 2020 with a par value of 1500 at stated rate of 16%. Currently, the market is selling these bonds at 18%. The bonds are expected to paid back by December 2030 with an interest paid quarterly effective March 1, 2020. What would be the bond price? Group of answer choices A. 6,870,050 B. No choice given C. 7,584,000 D. 7,485,006 E. 6,708,900On January 1, 2022, Investor Limited Purchased a bond with the following characteristics: - Face Value of $60,000 with a coupon rate of 6% per annum - Interest Paid semi-annually on June 30 and December 31 - Maturity date: December 31, 2026 The bonds were priced to yield 8%, Investor Limited paid $55,133 At December 31, 2022, the bonds had a fair value of $59,000 Required Assume that investor limited decides to account for this bond investment using FVOCI. Prepare the 2022 journal entries related to this bond investment. Assume that Investor Limited sells $45,000 face value of the bonds on January 1,2023. Proceeds from selling these bonds were $44,000. Prepare the journal entry for the sale of the bonds. Please, do the 2 questions!On 1st January 2019, Indus Motors floated multiple bonds with a face value of Rs. 1,000 each to generate Rs. One billion for its “Yaris” car manufacturing division. Maturity of bond is 5 years, while interest rate on coupon is 8% per annum. What will be the bond value if market interest rate is 5% and 12% respectively?From the above, at what rate bond will be sell at “Premium” and “Discount”
