Reference no: EM132944317

Question - Covid19 Company decided to issue 5,000, 8%, 5-year bonds, P1,000 face value each with warrants to acquire 4 shares of P 25 par value share capital at P 30 per share on January 1, 2020. The interest of the bonds is payable annually every December 31. It was determined that without the warrants the bond can be sold at 114.7 with a 6% effective yield, while the bonds with the warrants are sold at 120. All warrants are exercised at the end of the year of issue.

1. The value of the Share warrants at the date of issue is    

480,000

470,000

735,000

265,000

2. The value of the bonds at the date of issuance is    

5,000,000

5,265,000

5,735,000

6,000,000

3. The interest expense in 2020 is    

400,000

455,900

344,100

55,900

4. The bonds payable balance at December 31, 2020 is    

5,000,000

5,735,000

5,679,100

5,790,900

5. The balance of Share Premium at the exercise of the warrants is    

265,000

165,000

100,000

365,000