Answered: Twalilwisha Limited has issued bonds…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 3EA: Krystian Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the...

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Twalilwisha Limited has issued bonds with a face value of K100, which pay a coupon rate of 6%. Coupon payments are payable semi-annually. The yields on similar bonds are currently 8% per year. The maturity date is in 10 years’ time.
(i) What is the value of each bond?
(ii) What is the bonds annual effective rate?

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I don't agree with the solution for part 1, why is the period not been multiplied by 2 when coupon payment is semi-annually? Also for part 2, what is the formular being used to find the effective annual rate?

This is the reason have been requesting that the solutions show the formulas and not the excel. We dont go with laptops in the exam so that we can use excel to answer exam questions.

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