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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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
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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?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 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?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.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 percent
- On 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 January 1, 2021, a company issued an 8-year bond with a coupon rate of 15% and a par value of $ 1,750 that pays annual interest.Calculate the value of the bond based on the information provided with a required yield of 14%.According to the information obtained, is the bond sold at a discount or with a guarantee premium, and what is that value?David Palmer identified the following bonds for investment: BondA: A$1millionpar,10%annualcouponbond,whichwillmature on July 1, 2025. Bond B: A $1 million par, 14% semi-annual coupon bond (interest will be paid on January 1 and July 1 each year), which will mature on July 1, 2031. Bond C: A $1 million par, 10% quarterly coupon bond (interest will be paid on January 1, April 1, July 1, and October 1 each year), which will mature on July 1, 2026. The three bonds were issued on July 1, 2011. (a) If Bond B is issued at face value and both Bond B and Bond A are having the same yield to maturity (EAR), calculate the market price of Bond A on July 1, 2011. [N ote: Full mark would only be given to correct answer of which the values of those variables not provided in the question directly are derived.] (b） David purchased the Bond C on January 1, 2014 when Bond C was priced to have a yield to maturity (EAR) of 10.3812891%. David subsequently sold Bond C on January 1, 2016…
