Reference no: EM132008513
Question - Bond issue price and premium amortization
On January 1, 2015, Piper Co. issued ten-year bonds with a face value of $3,000,000 and a stated interest rate of 10%, payable semiannually on June 30 and December 31. The bonds were sold to yield 12%. Table values are:
Present value of 1 for 10 periods at 10% .386
Present value of 1 for 10 periods at 12% .322
Present value of 1 for 20 periods at 5% .377
Present value of 1 for 20 periods at 6% .312
Present value of annuity for 10 periods at 10% 6.145
Present value of annuity for 10 periods at 12% 5.650
Present value of annuity for 20 periods at 5% 12.462
Present value of annuity for 20 periods at 6% 11.470
Instructions
(a) Calculate the issue price of the bonds.
(b) Without prejudice to your solution in part (a), assume that the issue price was $2,652,000. Prepare the amortization table for 2015, assuming that amortization is recorded on interest payment dates using the effective-interest method.
|
Difference between a lan and a wan
: What is the difference between a LAN and a WAN and when are they both used.
|
|
What is your best estimate of the companys cost of equity
: If the stock currently sells for $72, what is your best estimate of the company's cost of equity capital using arithmetic and geometric growth rates?
|
|
Intellectual property affect the small business owner
: What are the elements of intellectual property and how do rules regarding intellectual property affect the small business owner?
|
|
What should be ibms target share price at the end of year
: If it wishes to finish the year with a 10% total shareholder return, then what should be IBM's target share price at the end of the year?
|
|
Calculate the issue price of the bonds
: On January 1, 2015, Piper Co. issued ten-year bonds with a face value of $3,000,000, Calculate the issue price of the bonds
|
|
What is the annual operating cash flow from this project
: Suppose you have been hired as a financial consultant to Defense Electronics, Inc. (DEI), a large, publicly traded firm that is the market share leader.
|
|
Prepare the adjusting entry for december
: Question - Bond interest and discount amortization. Prepare the adjusting entry for December 31, 2015. Use the effective-interest method
|
|
What is the firm-specific variance of your portfolio
: What is the firm-specific variance of your portfolio? What is the covariance between the portfolio and the market index?
|
|
What are the covariance and correlation coefficient
: Suppose that the index model for stocks A and B is estimated from excess returns with the following results.
|