Question

In: Accounting

Stockman Corp. purchased ten $1000, 8​% bonds of Power Source Corporation when the market rate of...

Stockman Corp. purchased ten $1000, 8​% bonds of Power Source Corporation when the market rate of interest was 6​%. Interest is paid​ semiannually, and the bonds will mature in ten years.

Using the PV function in Excel Superscript ®​, compute the price Stockman paid​ (the present​ value) for the bond investment.​ (Assume that all payments of interest and principal occur at the end of the period. Round your answer to the nearest​ cent.)

Solutions

Expert Solution

Solution:

Particualrs
Maturity value $10,000.00
Nos of interest period over life of bond 20
Stated rate per interest period 4.00%
effective-interest rate per each interest period 3.00%
payment amount per period $400.00
price Stockman paid​ (the present​ value) for the bond investment $11,488

ekkarill92 answered 6 months ago
Next > < Previous

Related Solutions

Shriver Corp. purchased ten $1,000 3​% bonds of Solar Corporation when the market rate of interest...
Shriver Corp. purchased ten $1,000 3​% bonds of Solar Corporation when the market rate of interest was 10​%. Interest is paid​ semiannually, and the bonds will mature in ten years. How much did shriver pay on the bond investment?
On December 31, 2018, when the market interest rate is 8%, Arnold Corporation issues $200,000 of 6%, 10-year bonds payable
On December 31, 2018, when the market interest rate is 8%, Arnold Corporation issues $200,000 of 6%, 10-year bonds payable. The bonds pay interest semiannually. Determine the present value of the bonds at issuance.
You Corp bonds are selling in the market for $1,020. These 10-year bonds pay 8% interest...
You Corp bonds are selling in the market for $1,020. These 10-year bonds pay 8% interest annually. If they are purchased at the market price, what is the expected rate of return?
Oak Branch Inc. issued $860,000 of 8%, 10-year bonds when the market rate was 7%. They...
Oak Branch Inc. issued $860,000 of 8%, 10-year bonds when the market rate was 7%. They received $921,127. Interest was paid semi-annually. Prepare an amortization table for the first three years of the bonds. Round intermediate and final answers to whole dollar amount. Cash Interest Payment Interest on Carrying Value Amortization of Premium Carrying Value Jan. 1, Year 1 $ June 30, Year 1 $      $      $      Dec. 31, Year 1                   June 30, Year 2            ...
What was the issuance price of the bonds if the market rate of Interest was 8%?
On January 1, 2016, Jason Company Issued $5 million of 10-year bonds at a 10% coupon Interest rate to be paid annually. The following present value factors have been provided: 
Pine Corporation issued $500,000 in ten-year, 8% bonds on September 1, 2019. Interest is to be...
Pine Corporation issued $500,000 in ten-year, 8% bonds on September 1, 2019. Interest is to be paid semi-annually on May 1 and November 1. The bonds were sold to yield 6% effective annual interest. Pine Corporation has a calendar year-end and follows IFRS. Instructions: Prepare the entries required for these bonds at • December 31, 2019(year end) • March 1, 2020 • September 1, 2020 when the interest was paid and the entire issue was retired early for $575,000 plus...
Gracie Corporation issued $300,000 5-year, 8% bonds for $325,591 on January 1, 2019 when the market...
Gracie Corporation issued $300,000 5-year, 8% bonds for $325,591 on January 1, 2019 when the market rate is 6%. Interest is paid semiannually every June 30 and December 31. Always assume companies use the effective-interest method. What is the par value of the bonds, also known as the principal or face value? What is the amount of cash Gracie Corporation receives when it issues the bonds? This is also known as the selling price or issue price of the bonds....
1. Joshua Corp. has 10% coupon bonds on the market with 8 years to maturity. The...
1. Joshua Corp. has 10% coupon bonds on the market with 8 years to maturity. The bonds make semi-annual payments and currently sell for 107 percent of par. What is the Yield-to-Maturity (YTM) and current yield on Joshua’s bonds? 2. Universal Exports has 11 percent coupon bonds making annual payments with an YTM of 8 percent. The current yield on these bonds is 10 percent. How many years do these bonds have until they mature? 3. Corn Inc. has an...
Bramble Corp. issues 4200, 10-year, 8%, $1000 bonds dated January 1, 2017, at 97. The journal...
Bramble Corp. issues 4200, 10-year, 8%, $1000 bonds dated January 1, 2017, at 97. The journal entry to record the issuance will show a A) credit to Cash for $4074000. B) debit to Cash of $4200000. C) credit to Bonds Payable for $4074000. D)debit to Discount on Bonds Payable for $126000.
A corporate bond is 8% 1000$ par, 5 year semi annual. The market rate of return...
A corporate bond is 8% 1000$ par, 5 year semi annual. The market rate of return is 10%. What is the price of the bond? show the work on excel
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT