Provide information on the implicaitons the bond issuance

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Reference no: EM131495357

Zeller & Merkel, Inc are considering Issuing $10,000,000 of 10-year bonds with a coupon rate of 4%, interest payablesemiannually. Although the current market rate is 4%, based on current economic forecasts, Zeller and Merkel reconize that market rates might increase to 6% by the time they issue the bonds. Althogh they do not like the option of added debt, they feel it is a reasonable alternative and should be considered. Howerever, they are not clear on the implication that this bond issue would have on the company and its financial statements, including the impact of the possibility that interest rates might increase by the time the bonds could be actually issued. Please provide information on the implicaitons the bond issuance could have on the financial statements and the possibility of the interest rates incresing by thee time the bonds are actually issued.

Reference no: EM131495357

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