Reference no: EM132943707

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. Find the value of the Share warrants at the date of issue?

A. 470,000

B. 480,000

C. 735,000

D. 265,000

2. Find the value of the bonds at the date of issuance?

A. 5,000,000

B. 5,735,000

C. 5,265,000

D. 6,000,000

3. Find the interest expense in 2020?

A. 400,000

B. 455,900

C. 344,100

D. 55,900

4. Find the bonds payable balance at December 31, 2020?

A. 5,679,100

B. 5,790,900

C. 5,000,000

D. 5,735,000

5. Find the balance of Share Premium at the exercise of the warrants?

A. 265,000

B. 365,000

C. 165,000

D. 100,000