Sandra has just purchased Insidia Ltd bonds.Using the following information at the time of the purchase,what is the nominal annual coupon rate on the bond? Sandra paid a total of $18,533.14 based on the market price with a yield of 10% p.a. compounding annually.The face value of the bond is $20,000.The bond pays coupons annually and matures in exactly 40 years. A.9.5% B.9% C.10% D.9.75% E.9.25%

Sandra has just purchased Insidia Ltd bonds.Using the following information at the time of the purchase,what is the nominal annual coupon rate on the bond? Sandra paid a total of $18,533.14 based on the market price with a yield of 10% p.a. compounding annually.The face value of the bond is $20,000.The bond pays coupons annually and matures in exactly 40 years. A.9.5% B.9% C.10% D.9.75% E.9.25%

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 3EB: Smashing Cantaloupes Inc. issued 5-year bonds with a par value of $35,000 and an 8% semiannual...

See similar textbooks

Similar questions

Krystian Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the market rate was 6%. Interest was paid semi-annually. Calculate and explain the timing of the cash flows the purchaser of the bonds (the investor) will receive throughout the bond term. Would an investor be willing to pay more or less than face value for this bond?
Waylan Sisters Inc. issued 3-year bonds with a par value of $100,000 and a 6% annual coupon when the market rate of interest was 5%. If the bonds sold at 102.438, how much cash did Williams Sisters Inc. receive from issuing the bonds?
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 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.
Manuel bought a $100,000 bond with a 5.5%coupon for $92,450 when it had five years remaining to maturity. What was the prevailing market rate at the time Manuel purchased the bond? Bond interest is paid semi-annually The bond was originally issued at its face value Bonds are redeemed at their face value at maturity Market rates of return and yields to maturity are compounded semiannually.
Mark Goldsmith's broker has shown him two bonds issued by different companies. Each has a maturity of 4 years, a par value of $1,000, and a yield to maturity of 7.50%. The first bond is issued by Crabbe Waste Disposal and has a coupon interest rate of 6.326% paid annually. The second bond, issued by Malfoy Enterprises, has a coupon interest rate of 8.80% paid annually. If Mark invests in the Crabbe Waste Disposal bond, the value of the principal payment plus the value of his reinvestment account per bond is $_____ (Round to the nearest cent.) If Mark invests in the Malfoy Enterprises bond, the value of the principal payment plus the value of his reinvestment account per bond is $_____ (Round to the nearest cent.) Why are the two values calculated in part d different? Mark would be better off investing in which one?
BA Corp is issuing a 10-year bond with a coupon rate of 8 percent. The interest rate for similar bonds is currently 6 percent. Assuming annual payments, what is the value of the bond? Knight, Inc., has issued a three-year bond that pays a coupon rate of 6.10 percent. Coupon payments are made semiannually. Given the market rate of interest of 5.80 percent, what is the market value of the bond? Diane Carter is interested in buying a five-year zero coupon bond with a face value of $1,000. She understands that the market interest rate for similar investments is 9 percent. Assume annual coupon payments. What is the current value of this bond? Ruth Hornsby is looking to invest in a three-year bond that makes semiannual coupon payments at a rate of 5.875 percent. If these bonds have a market price of $981.13, what yield to maturity can she expect to earn? Rudy Sandberg wants to invest in four-year bonds that are currently priced at $868.43. These bonds have a coupon rate of 6 percent and make…