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Determine the total amount of cash

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Question - EAC Ltd., which uses IFRS and has a December 31 year-end, issued an 8-year bond with a maturity amount or par value of $750,000 on June 1, 20X1. The bond matures on May 31, 20X9 and has a stated interest rate of 4%. When issued, the market interest rate was 5%. The bond pays interest semi-annually on November 30 and May 31 commencing on November 30, 20X1.

Required -

1. Determine the price that the bond will sell for on June 1, 20X1.

2. Assume that the bond sells three months late on September 1, (interest payment dates and maturity dates are unchanged). Determine the total amount of cash, including accrued interest that the company will receive when selling the bond.

Reference no: EM132869530

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