Computation finance, valuation, bonds

Reference no: EM1316901

Computation finance, valuation, Bonds and Annuity new carrying value for the bond

Bond Problem:

On January 1, 2008, the Junco Company issued $500,000 face amount 10 year, 10% stated rate bond when the market interest rates were 11%. The bonds pay interest semiannually each June 30th and December 31st and mature on December 31, 2018.

Required:

a. What is the effective interest rate?

b. Using the present value tables contained on the following pages, calculate the proceeds (issue price) of the Junco Company\'s bonds on January 1, 2008 assuming that the bonds were sold to provide a market rate of return to the investor.

c. What will be the cash interest payment made on June 30th, 2008

d. Using the effect interest rate method, determine the interest that will be recognized on the income statement on June 30th, 2008.

e. What will be the new carrying value for the bond on June 30th, 2008?

Reference no: EM1316901

Questions Cloud

Plotting the demand curve : Use the demand curve to help you calculate the number of DVDs rented per month and the amount of consumer surplus derived at a rental price of $5.

Decision to do a hypothesis test : Suppose the population is normally distributed they make a decision to do a hypothesis test.

Describe if the life expectancy of people in africa : A sociologist wants to describe if the life expectancy of people in Africa is lesser than the life expectancy of people in Asia.

Securing the company website : A local business is about to launch the website in order to boost the business. The website will also consist of the information related to the company and all products that are available.

Computation finance, valuation, bonds : Computation finance, valuation, Bonds and Annuity new carrying value for the bond and stated rate bond when the market interest rates were

The graph of an exponential function : The graph of an exponential function

Computing percentage of children who watch television : Based on information, compute the following: Percentage (or portion) of children who watch television less than 6.5 hours a week.

Determine theoretical yield : Determine theoretical yield, limiting agent and excess reagent - How much excess reagent remains after the reaction goes to completion

Developing the new websites : A developer obtained the following three rules in specification for a new Web site. If a Web page consists of the word “painting”, then it also comprises either “acrylic” or “oil”.

User Account

All Pages