Matthew Company issued 10-year, 7% bonds (paying semiannual interest) with a par value of $100,000. The...

Matthew Company issued 10-year, 7% bonds (paying semiannual interest) with a par value of $100,000. The market rate of interest when the bonds were issued was 6%. Compute the price of the bonds when they were issued. **How do i answer this NOT using a financial calculator**

Solutions

Expert Solution

for formulas and calculations, refer to the image below -

In case you have any query, kindly ask in comments.

ekkarill92 answered 11 months ago

Next > < Previous

Related Solutions

Enviro Company issues 10%, 10-year bonds with a par value of $250,000 and semiannual interest payments....

Enviro Company issues 10%, 10-year bonds with a par value of $250,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 12%, which implies a selling price of 88 1/2. 1. Prepare the journal entries for the issuance of the bonds. Assume the bonds are issued for cash on January 1, 2017. 2. Confirm that the bonds’ selling price is approximately correct. Use present value Table B.1 and Table B.3 in Appendix B....

Adonis Corporation issued 10-year, 7% bonds with a par value of $130,000. Interest is paid semiannually....

Adonis Corporation issued 10-year, 7% bonds with a par value of $130,000. Interest is paid semiannually. The market rate on the issue date was 6%. Adonis received $139,674 in cash proceeds. Which of the following statements is true? Adonis must pay $139,674 at maturity plus 20 interest payments of $4,550 each. Adonis must pay $130,000 at maturity plus 20 interest payments of $4,550 each. Adonis must pay $130,000 at maturity plus 20 interest payments of $3,900 each. Adonis must pay...

Garcia Company issues 10%, 15-year bonds with a par value of $250,000 and semiannual interest payments....

Garcia Company issues 10%, 15-year bonds with a par value of $250,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 8%, which implies a selling price of 117 1⁄4. The effective interest method is used to allocate interest expense. 1. Using the implied selling price of 117 1⁄4, what are the issuer's cash proceeds from issuance of these bonds? 2. What total amount of bond interest expense will be recognized over...

Enviro Company issues 6.50%, 10-year bonds with a par value of $350,000 and semiannual interest payments....

Enviro Company issues 6.50%, 10-year bonds with a par value of $350,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 3.50%, which implies a selling price of 125 7/8. The straight-line method is used to allocate interest expense. 1. Using the implied selling price of 125 7/8. what are the issuer’s cash proceeds from issuance of these bonds? 2. What total amount of bond interest expense will be recognized over the...

Enviro Company issues 8%, 10-year bonds with a par value of $310,000 and semiannual interest payments....

Enviro Company issues 8%, 10-year bonds with a par value of $310,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10%, which implies a selling price of 87 1⁄2. The straight-line method is used to allocate interest expense. 1. Using the implied selling price of 87 ½, what are the issuer's cash proceeds from issuance of these bonds? 2. What total amount of bond interest expense will be recognized over the life...

X Company issued at par 4-year term bonds with a par value of $100,000, dated January...

X Company issued at par 4-year term bonds with a par value of $100,000, dated January 1, 2020, and bearing interest at an annual rate of 6 percent payable annually on December 31. At the time of issue, the market rate for such bonds is 9 percent. X amortizes the discount or premium using effective interest rate method. Required: 1- Compute the selling price of bond. 2- Record the journal entry. 3- Prepare schedual of amortization. 4- Record the adjusting...

X Company issued at par 4-year term bonds with a par value of $100,000, dated January...

X Company issued at par 4-year term bonds with a par value of $100,000, dated January 1, 2020, and bearing interest at an annual rate of 6 percent payable annually on December 31. At the time of issue, the market rate for such bonds is 9 percent. X amortizes the discount or premium using effective interest rate method. Required: Compute the selling price of bond. Record the journal entry. Prepare schedual of amortization. Record the adjusting entries for all years....

Compute the selling price of 10%, 10-year bonds with a par value of $360,000 and semiannual...

Compute the selling price of 10%, 10-year bonds with a par value of $360,000 and semiannual interest payments. The annual market rate for these bonds is 12%. Use present value Table B.1 and Table B.3 in Appendix B. (Round all table values to 4 decimal places, and use the rounded table values in calculations.) cash flow table value present value $360,000 par (maturity) date 18,000 interest payment Price of Bond

A company issued 10%, 10-year bonds with a par value of $1,000,000 on January 1, 2008,...

A company issued 10%, 10-year bonds with a par value of $1,000,000 on January 1, 2008, at a selling price of $885,295, to yield the buyers a 12% return. The company uses the effective interest amortization method. Interest is paid semiannually each June 30 and December 31. (1) Prepare an amortization table for all the payment periods using the format shown below: (2) Answer the following questions based on your work: (a) Which direction is carrying value going? (b) Describe...

Apple Company issued five-year 7% bonds with a face value of $100,000, for $96,567.94 on January...

Apple Company issued five-year 7% bonds with a face value of $100,000, for $96,567.94 on January 1, Year 1 when the market (effective) rate of interest was 7.5%. The bonds pay annual interest each December 31. Stanton uses the effective interest method for amortization of premium or discount on bonds payable. Round your answers to two decimal places. Required: a) What is the annual amount of cash that Stanton will pay to bondholders for interest? b) What amount of interest...

Subjects