Compute what is the purchase price of the investment

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Reference no: EM132733115

Accounting for Debt Investments

1. On January 1, 2019, Shine Company purchased a 6-year bond with a face amount of P5,5 00,000 to yield 8%. Interest is to be paid every December 31 while the principal is to be repaid on maturity. The maturity date of the investment is on January 1, 2025. An active market is available so there is no problem to ascertain the fair value of the bonds. The stated rate ofthe bond is 11.50%. On December 31, 2019 the bond is trading at 12%; on December 31, 2020 the bond is trading at 11.25%; on December 31, 2021 the bond is trading at 14%; and on December 31, 2022 the bond is trading at 13.75%. Use four decimal places only.

Problem a. What is the purchase price of the investment?

Reference no: EM132733115

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