Answered: the carrying value of the bonds after…

Business

Accounting

the carrying value of the bonds after one year?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 5EB: Haiku Inc. issued $600,000 of 10-year bonds with a stated rate of 11% when the market rate was 12%....

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Question

Novak

Company issued

$400,000,

10%,

five-year

bonds for

111,

with interest paid annually. Assuming straight-line amortization, what is the carrying value of the bonds after one year?

$435,200

$439,600

$452,800

Definition Definition Calculates the present value of a bond's expected future periodic coupon payments. Bond valuation determines the theoretical fair value of a particular bond and helps investors estimate what rate of return they could expect. The bond's theoretical fair value is computed by discounting the future cash flows or coupon payments by an applicable discount rate.

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