Question
In: Finance
On January 1, 2018, Corp X issued 3%, 3 ½ year Bonds to the public, and...
On January 1, 2018, Corp X issued 3%, 3 ½ year Bonds to the public, and also signed a 3 and 1/2 -year lease with PH Corp. Payments of $10,000 on the lease are made at the end of the year for years 1,2 and 3 and ($5,000 in the last period; year 4.) There are no provisions for a bargain purchase or an extension of the lease term. The asset has a fair value of $35,000 and has a useful economic life of 4 years.
Corp. X is rated as a BBB rated company by Moody’s Investors-a rating company.
Additional Facts
1-BBB Market Interest rates:
Date of issue on 12/31/2019
Year 1 2% 1.5%
Year 2 2.5% 2.0%
Year 3 2.75% 2.5%
Year 4 3,5% 3.0%
Year 5 4.0%. 4.0%
BTW There is no correct answer
Question 7
1-Calculate the market interest rate at date of issue?
2-Calculate the price of the bond at the date of issue?
3-What is the interest expense in Year 1.
4-What is the Balance Sheet value of Bonds payable on 12/31/19? Please provide 2 answers.
Solutions
jeff jeffy answered 1 year agoRelated Solutions
On January 1, 2018, Corp X issued 3%, 3 ½ year Bonds to the public, and...
On January 1, 2018, Corp X issued 3%, 3 ½ year Bonds to the
public, and also signed a 3 and 1/2 -year lease with PH Corp.
Payments of $10,000 on the lease are made at the end of the year
for years 1,2 and 3 and ($5,000 in the last period; year 4.) There
are no provisions for a bargain purchase or an extension of the
lease term. The asset has a fair value of $35,000 and has a...
On January 1, 2018, Corp X issued 3%, 3 ½ year Bonds to the public, and...
On January 1, 2018, Corp X issued 3%, 3 ½ year Bonds to the
public, and also signed a 3 and 1/2 -year lease with PH Corp.
Payments of $10,000 on the lease are made at the end of the year
for years 1,2 and 3 and ($5,000 in the last period; year 4.) There
are no provisions for a bargain purchase or an extension of the
lease term. The asset has a fair value of $35,000 and has a...
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