Union Local School District has bonds outstanding with a coupon rate of 4.6 percent paid semiannually and 21 years to maturity. The yield to maturity on these bonds is 3.9 percent and the bonds have a par value of $5,000. What is the dollar price of the bond?

Union Local School District has bonds outstanding with a coupon rate of 4.6 percent paid semiannually and 21 years to maturity. The yield to maturity on these bonds is 3.9 percent and the bonds have a par value of $5,000. What is the dollar price of the bond?

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...

See similar textbooks

Related questions

Q: Payments of $50,000 due in 200 days and $60,000 due in 600 days are to be replaced by payments of…

A: The concept of TVM refers to the capacity of money to earn interest which makes money earned earlier…

Q: Kaskin, Inc., stock has a beta of 1.2 and Quinn, Inc., stock has a beta of .6. Which of the…

A: Beta of a stock is a metric that measures the volatility of returns of a stock when compared to the…

Q: Suppose GE plans to issue a note that matures in 2 years and has a 3.67% coupon rate. If the market…

A: Face value of note $1,000.00Annual coupon rate3.67%Annual coupon payment $36.70Total number of…

Q: An amount, P, must be invested now to allow withdrawals of $1,000 per year for the next 13 years and…

A: We can use the formula for the present value of an annuity: PV_annuity = PMT * [(1 - (1 + r)^(-n)) /…

Q: e MoMi Corporation's cash flow from operations before interest and taxes was $3.8 million in the…

A: Free cash flow is the cash flow which is available for the firm to distribute to the shareholders.…

Q: n investor purchases a long call at a price of $3.06. The strike price is $21. If the current stock…

A: Call option is derivative product which gives the investors right to buys stock on expiration but…

Q: Derek borrows $305,963.00 to buy a house. He has a 30-year mortgage with a rate of 5.49%. After…

A: Present value refers to the current date value of all the future and terminal cash flows. Cash flows…

Q: Jensen Inc. has total equity of $70 billion and 670 million shares outstanding. Its ROE is 18.32%.…

A: Total Equity = e = $70 billionNumber of Share = n = 670 millionReturn on Equity = roe =…

Q: a) What is the DPBP for the investment? Show your answer to 2 decimal places. b) Based on a 10-year…

A: The time it takes for an investment to recoup its initial cost is measured using the discounted…

Q: You have $150,000 invested in three stocks as follows: Stock Investment Stock's Beta SYK $50,000 1.9…

A: Beta of portfolio is computed as follows:-Bp = (Ba*Wa)+(Bb*Wb)+(Bc*Wc)whereBp =Beta of portfolioBa =…

Q: Seller A Offer Price 900 O b) 950 1,000 Quantity (shares) over 150 shares c) 150 shares d) less than…

A: Variables in the question: Seller A Offer Price ($)Quantity (shares)Stock Market Price for Google…

Q: Hawkeye Inc. has an outstanding issue of preferred stock with an annual dividend of $1.21 per share.…

A: Current price of prferred stock is computed as follows:-Current price of prferred stock =

Q: The treasurer of an Australian firm decides to hedge a planned issue of commercial paper that would…

A: Hedge refers to a strategy used to offset or mitigate potential losses in an investment or…

Q: The portfolio on the Capital Allocation Line (CAL) that has an expected return of 20% invests weight…

A: Risk and return are essential financial principles. The term “risk” refers to the uncertainty and…

Q: You have been tasked with using the FCF model to value Julie's Jewelry Co. After your initial…

A: Value of equity:Equity represents the ownership interest in a business or asset, and its value is…

Q: Primare Corporation provided the following data for last month's manufacturing operations. Purchases…

A: The degree of operational leverage (DOL) is a financial indicator that gauges a company's operating…

Q: a. If interest rates suddenly rise by 3 percent, what is the percentage change in the price of Bond…

A: Price of the bond is the PV of all future coupons and par value discounted at the YTM. Since the…

Q: Innovation Company is thinking about marketing a new software product. Upfront costs to market and…

A: Net present value is defined as the difference between total cash inflows and total outflows. It…

Q: The cash price of a $1,000 bond that matures in exactly 18 months is $1001.74. Current continuously…

A: Price of the bond is the PV of all future coupons and par value discounted at the spot rate. By…

Q: uppose you purchase one share of the stock of Volatile Engineering Corporation at the beginning of…

A: The rate of return calculates the gain or loss on an investment relative to the initial amount…

Q: Are the following true or false? Explain. Stocks with a beta of zero offer an expected rate of…

A: False. Stocks having a beta of 0 do not have a zero expected rate of return.. The sensitivity of a…

Q: Mobray Corp is experiencing rapid growth. Dividends are expected to grow at a rate of 20% for the…

A: Current dividend = $3Growth rate = 20% for 3 years and 5% from thereonRequired return = 10%

Q: Current Attempt in Progress Crane Company signs a contract to sell the use of its patented…

A: The trade name is an intangible asset for the business, It's reported in the assets section of the…

Q: You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend…

A: According to Capital asset pricing model,k = Rf+[b*(Rm-Rf)]wherek = Required return Rf = risk-free…

Q: tated face value? savings bond cost when you initially purchase it? Assuming 2.69 percent annually,…

A: NPER" stands for the "Number of Periods" in financial and investment calculations. It is a function…

Q: Suppose we are thinking about replacing an old computer with a new one. The old one cost us…

A: Net present value: It is the difference between the present value of cash inflows and cash outflows.

Q: Full Boat Manufacturing has projected sales of $124.5 million next year. Costs are expected to be…

A: Here,Revenue $ 124.50Cost $ 74.40Growth Rate 14%Decline in Growth Rate 2% every year till 6%…

Q: t is no correct, can you try again, please

A: Future value of the amount is the amount of deposit made and amount of interest accumulated over the…

Q: Professor Brad has been offered the following opportunity: A law firm would like to retain his for…

A: To determine the Internal Rate of Return (IRR) for Professor Brad's payment arrangement, we need to…

Q: Titan Corporation has 9.3 million shares of common stock outstanding and 370,000 6.1 percent…

A: Capital structure can be defined as the proportional components of the sources of capital the…

Q: If the rate of inflation is 5.7%, what nominal interest rate is necessary for you to earn a 3.5%…

A: Nominal interest rate can be calculated by using the equation below.Nominal interest rate =[( 1…

Q: eBook Thirteen years ago, Elite Elements issued a 15-year bond with a $1,000 face value and a 4…

A: Price of bond is the sum of the present value of the interest coupon payments and present value of…

Q: What is the company's degree of operating leverage? Note: Round your answer to 2 decimal places.…

A: The degree of operational leverage (DOL) is a financial indicator that gauges a company's operating…

Q: In the Concord Corporation, indirect labor is budgeted for $51000 and factory supervision is…

A: Flexible budget:A flexible budget is a budget that adjusts to changes in the level of activity or…

Q: Instead, assume that the index is a market cap weighted index, but it is still 550 at the end of the…

A: Calculation of Value of Index : sum of ( quantity , Price in current year ) / sum of ( quantity ,…

Q: Rework Table 7.4 for horizon years 1, 2, 3, and 10, assuming that investors expect the dividend and…

A: Stock price will be the sum of present value all future payments and present value of terminal…

Q: Midland Oil has $1,000 par value bonds outstanding at 16 percent interest. The bonds will mature in…

A: Price of the bond is the PV of all future coupons and par value discounted at the YTM. n = time…

Q: An eight-year bond with a current market price of $700 has a 6% coupon rate. If the bond pays…

A: Yield to maturity is the return the investor gets by holding the given bond till its maturity, It…

Q: Identify all the regional regulatory institutions within the CIBC FirstCaribbean International Bank…

A: CIBC FirstCaribbean International Bank operates within the Caribbean region, and as such, its…

Q: Eleven years from now you would like to withdraw $20,000 a year for a period of 5 years (periods 11…

A: To calculate the present value of these future withdrawals, we can use the following formula: PV =…

Q: You own a bond that has a duration of 5 years. Interest rates are currently 6%, but you believe the…

A: Duration = 5 yearsInterest Rate = 6%Increase in interest rate = 23 basis pointsAn increase in…

Q: O Figure (2) shows an investor that borrows in risk-free rate and invests in the risky asset. O…

A: The green curve is indifference curve Region above that has higher risk and region below it has…

Q: Problem 2 (1p): What is the interest rate that can help you earn $3,000 from $1,700 in two years,…

A: Future Value is that amount which is received by the investor at some specified period of time at…

Q: A firm has 4000m in balance sheet debt (book value is equal to market value in this case) and 1000m…

A: WACC is cost of capital of company and is weighted cost of equity and weighted cost of debt and is…

Q: Suppose Megan is choosing how to allocate her portfolio between two asset classes: risk-free…

A: Here,CombinationFraction of Portfolio in Diversified Stocks (%)Average Annual Return (%)Standard…

Q: Bing Enterprises, Inc., has been considering the purchase of a new manufacturing facility for…

A: The present value of all anticipated cash flows (including inflows and outflows) connected to a…

Q: You find the following corporate bond quotes. To calculate the number of years until maturity,…

A: A bond is a kind of debt security issued by the government and private companies to the public for…

Q: If the yield on a 5-year Treasury bond is 7.38% and the yield on a 6-year Treasury bond is 7.88%,…

A: Yield on 5-year Treasury bond = 7.38%Yield on 5-year Treasury bond = 7.88%Inflation in 6 years = ?

Q: The half-yearly nominal rate of interest convertible monthly is 5.2%. Calculate the force of…

A: Nominal rate of interest = 5.2%Compounding period = half-yearlyRequired = monthly compounding

Q: Could you please show me how to solve this with formulas

A: We can determine the amount to be repaid under simple interest (SI) and compound interest (CI) using…

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Given Value

VIEW

Step 2: Calculation

VIEW

Solution

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

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 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.
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?
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?
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?
Evie Inc. issued 50 bonds with a $1,000 face value, a five-year life, and a stated annual coupon of 6% for $980 each. What is the total amount of interest expense over the life of the bonds?
The University Club recently issued 1,500,000 of 10-year, 9% bonds at an effective interest rate of 10%. Bond interest is payable annually. You have been asked to calculate the issuance price of the bonds and prepare amortization schedules for any discount or premium. The worksheet BONDS has been provided to assist you. Note that the worksheet contains a scratch pad at the bottom that has been preprogrammed to automatically compute and display the relevant cash flows needed for bond pricing.
Union Local School District has a bond outstanding with a coupon rate of 2.9 percent paid semiannually and 24 years to maturity. The yield to maturity on this bond is 2.5 percent, and the bond has a par value of $10,000. What is the dollar price of the bond?
Union Local School District has bonds outstanding with a coupon rate of 3.6 percent paid semiannually and 12 years to maturity. The yield to maturity on these bonds is 2.4 percent and the bonds have a par value of $5,000. What is the price of the bonds?
Union Local School District has a bond outstanding with a coupon rate of 3.4 percent paid semiannually and 19 years to maturity. The yield to maturity on this bond is 3.6 percent, and the bond has a par value of $5,000. What is the price of the bond?
Union Local School District has bonds outstanding with a coupon rate of 2.9 percent paid semiannually and 24 years to maturity. The yield to maturity on these bonds is 2.5 percent and the bonds have a par value of $10,000. What is the dollar price of the bonds? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.