the price of regular bonds, Financial Accounting

Flying High Inc. plans to raise $5,000,000 external financing by issuing bonds, and is considering two options: regular bonds & zero couple bonds.  The regular bonds will have coupon rate at 10%, payable semi-annually, with face value of $1,000 each and maturity of 5 years.  The zero coupon bonds will be the similar as the regular bonds except that there is no coupon attached to these bonds, i.e. no interest payment throughout the life of the zero coupon bond.

Present market interest rate for 5-year bond of same bond issuers like Flying High Inc. is 8%.  Suppose there is no issuance cost.

Requirements: Show your calculation

a. Determine the price of regular bonds at the time of issuance.

b. Based on $1,000 face value for each bond, what is the minimum number of regular bonds to be issued to raise the required external financing of $5,000,000?

c. Determine the price of zero coupon bonds at the time of issuance.

 

 

Posted Date: 3/16/2013 8:48:12 AM | Location : United States







Related Discussions:- the price of regular bonds, Assignment Help, Ask Question on the price of regular bonds, Get Answer, Expert's Help, the price of regular bonds Discussions

Write discussion on the price of regular bonds
Your posts are moderated
Related Questions
For this question you will use the dataset "murder.xls", which includes: • rate = Murder rate per 100,000 • convictions = Number of convictions divided by number of murders • execu

explain the terms recording,classifying,summarizing and communicating

Olivia has received a $15 gift certificate that is redeemable only for roasted peanuts. Bags of roasted peanuts come in two sizes, regular and jumbo. A regular bag contains 30 pean

provide 5% for doubtful debt what is the journal entry

Changes in accounting estimates In preparing financial statements, it may be difficult to arrive at exact values for certain items to be presented in the financial statements and

Prospective Financial Information (forecast and projection) - Forecast: Prospective financial statements which present, to the best of responsible party's knowledge and belief, an

Question 1 The following information should be used for questions #1 through #7: Jersies, Inc financial statement data.   2009 2010


You are the Genesis accountant and have taken a class recently in financing. You agree to prepare a PowerPoint presentation of approximately 6-8 minutes using the examples and info

International Accounting Standards Committee, the (IASC) - is an independent private sector body, formed in 1973, with objective of harmonizing the accounting principles that are u