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In: Accounting
Debt Valuation: Interest-Bearing Debentures At the beginning of the year, Global Minds Inc. issued $2 million...
Debt Valuation: Interest-Bearing
Debentures
At the beginning of the year, Global Minds Inc. issued $2 million
(maturity value) of 20-year debentures.
The debentures carried a 4% per period coupon rate, were subject to semiannual compounding, and had been issued at a time when the yield rate was 6% per period.
Required
1. Calculate the proceeds received by Global Minds when the
bonds were sold.
Do not round until your final answer. Round your answer to
the nearest dollar.
$Answer
3. Calculate the market value of the bonds if, after 10 years,
the market yield rate is 10% per period.
Do not round until your final answer. Round your answer to
the nearest dollar.
$Answer
4. Calculate the financial effects to each account as a result of retiring the Global Minds bonds after 15 years assuming that the market yield rate is 10% per period at the time of retirement.
Hint: To compute the book value of the bonds - calculate the bond's present value for the remaining payment periods.
Do not round until your final answer. Round your
answer to the nearest dollar.
Enter an increase to an account as a positive number, and
decreases to an account as a negative number.
| Bonds Payable | Answer |
| Bond discount | Answer |
| Cash | Answer |
| Gain/(Loss) | Answer |
Solutions
ekkarill92 answered 1 year agoRelated Solutions
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