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Company Alfa issued bonds with a par value of $ 50 million and a nominal interest rate of 5.25%. The bonds pay interest every six months on January 1 and July 1. They were issued on July 1, 2019 and on that date had a duration of 20 years. On the issue date, the market interest rate (yield) was 6.50%. Except that the bonds do NOT pay periodic interest.
Question a. Prepare the journal entry to record the issuance of the bonds on July 1, 2019.
Question b. Prepare the wage entry for July 1, 2021.
Question c. If, with eight years until the bonds mature, the company withdraws them in the amount of $ 33 million, calculate the gain or loss on the withdrawal of the bonds.
Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest. How much control does the Fed have over this longer real rate?
Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.
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Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.
Simple Interest, Compound interest, discount rate, force of interest, AV, PV
CAPM and Venture Capital
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