($ in millions) The lease payments are $182.53 per month and have a present value of $6,000. Bond: What's the Difference? Sales $ 940,000 06/30/2022 7,000 7,855 855 197,225 A) Bond 1. When preparing financial statements, accountants must analyze the money collected to determine what amount should be recorded as revenue for that period. Total stockholders' equity (end of year) 36,000 C) $5,000,000. Net income 7,000 A) At par. Uploaded By joannaaaabanana. (Hint: Be sure to provide the annual rate rather than the six-month rate.) Issuing bonds is one way for companies to raise money. C) Provide potential benefits to both the issuer and the investor. D) $1,000, Answer: A Use (PV of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. 145) Tomkin Library System issues $5 million in bonds on January 1, 2021 that pay interest semi-annually on June 30 and December 31. What is Montezuma's return on assets? 12/31/2024 7,000 6,110 890 100,943 More than the effective interest. Net income 54,000 06/30/2021 $ 400,000 $ 440,000 $ 40,000 8,840,000 NDTV Q3 profit down 49.7% to Rs 15 cr, revenue down 9.4% to Rs 105.4 cr. 81) Which of the following definitions describes a serial bond? C) If the bonds were sold at either a discount or a premium. D) The second year's interest expense would have been less. 92) A $500,000 bond issue sold for $510,000. A) Face amount times the stated interest rate. Smaller municipalities may issue bonds in a similar matter to governments. i = 6%/2 semi-annual periods = 3% B) Bond X will sell for more than Bond Y. Answer: C Total assets (end of year) 60,000 n = 5 years 2 periods each year = 10 periods. $500,000 0.61027* = $ 305,135 136) X2 issued callable bonds on January 1, 2021. 12/31/2023 7,000 7,961 961 200,000 Bonds issued at a premium have a bond price of more than 100. 12/31/2021 7,000 7,822 822 196,370 $100,000 0.70892* = $ 70,892 You can specify conditions of storing and accessing cookies in your browser. B) Provide potential benefits only to the investor. A) 3%. A) A credit of $6 million to a gain account. B) $370 gain. Answer: C $2,500^ 8.11090** = $ 20,277 (rounded) Accounting Cycle and Classifying Accounts, Adjusting Accounts for Financial Statements, Asset Demand and Supply under Uncertainty, Business Analytics & Technology Management Chapter 2, Business Analytics & Technology Management Chapter 3, Business Analytics & Technology Management Chapter 4, Business Analytics & Technology Management Chapter 5, Business Analytics & Technology Management Chapter 6, Capital Budgeting and Managerial Decisions, Derivative Instruments and Hedging Activities, External Financial Statements and Revenue Recognition, Financial Intermediaries and Financial Markets, Financial Markets and Securities Offerings, Financial Statements and Accounting Transactions, Integrated Marketing Communications and Direct Marketing, Interactive Marketing and Electronic Commerce, Interpersonal and Organizational Communication, Introduction to Human Resource Management, Introduction to Human Resources Assessment, Managerial Accounting Concepts and Principles, Market Segmentation Targeting and Positioning, Organization and Operation of Corporations, Organizational Markets and Buyer Behaviour, Profitability Analysis and Analytical Issues, Profitability Analysis and Decentralization, Reporting and Analyzing Long Lived Assets, Responsibility Accounting and Performance Measures, Understanding Interest Rates Determinants, If coupon rate is equal to going rate of interest then bond will be sold, Falling interest rate leads change to bondholder income which is, Bonds issued by corporations and exposed to default risk are classified as, Treasury bonds are exposed to additional risks that are included, Bond which is offered below its face value is classified as, Risk of fall in income due to fall in interest rates in future is classified as, Bonds that have high liquidity premium are usually have, Redemption option which protects investors against rise in interest rate is Within this time frame, there are short-term bonds (1-3 years), medium-term bonds (4-10 years) and long-term bonds (10 years or more). n = 5 years 2 periods each year = 10 periods (Hint: Be sure to provide the annual rate rather than the six-month rate.) Answer: D A) $10,000. Issuing shares of stock grants proportional ownership in the firm to investors in exchange for money. B) $320,000 06/30/2023 7,000 7,925 925 199,039 B) $45,000. (Use Table 2 and Table 4, contained within a separate file.) The market rate for this type of bond is 7%. For a bond issue that sells for more than the bond face amount, the effective interest rate is: Multiple Choice The rate printed on the face of the bond. ASK AN EXPERT. 12/31/2022 7,000 6,208 792 102,673 C) $359,528. B) If the bonds were sold at a premium. D) 7%. A) Decrease for bonds issued at a discount and decrease for bonds issued at a premium. *Table 2: B) 3.5%. The bonds pay interest annually on December 31 each year. These bonds will sell at a price that is: ^$500,000 6% 1/2 year = $15,000. 61) How does the amortization schedule for an installment note such as a car loan differ from an amortization schedule for bonds? Interest payments are made semi-annually. Companies that need to raise money can continue to issue new bonds as long as they can find willing investors. d. independent of rate stated on the bond, If bonds are issued at a premium this indicates that =200000. Companies are in business to generate corporate profits, so minimizing the interest is an important consideration. c. debenture bonds d. Nominal interest rate exceeds effective interest rate, Copyright 2023 StudeerSnel B.V., Keizersgracht 424, 1016 GC Amsterdam, KVK: 56829787, BTW: NL852321363B01, Calculus (Gilbert Strang; Edwin Prine Herman), Intermediate Accounting (Conrado Valix, Jose Peralta, Christian Aris Valix), Rubin's Pathology (Raphael Rubin; David S. Strayer; Emanuel Rubin; Jay M. McDonald (M.D. Discount bonds may also be a bond currently trading for less than its face value in the secondary market. N = 5 years 2 periods each year = 10 periods. Multiple Choice The rate printed on the face of the bond. 168) Mountain Excursions issues a bond due in 10 years with a stated interest rate of 7% and a face value of $200,000. D) Bonds 1 and 3. C) $8,000,000. 107) Which of the following is true for bonds issued at a premium? B) Increase in expenses. Firms may even issue different classes of bonds, with differing bond characteristics. Date Cash Paid Interest Expense Decrease in Carrying Value Carrying Value A) $197,612.34 A portion of the bond amortization schedule appears below: A) If the bonds were sold at a discount. D) $800,000. The ratio of the current net market value of open positions held n = 10 years 2 periods each year = 20 periods. D) The carrying value of bonds will never decrease. D) 25%, Answer: A Time To Payment. 67) On January 1, 2021, Red, Inc. borrowed cash by issuing a $500,000, 5-year note that specified 6% interest to be paid on December 31 of each year and the $500,000 to be paid at maturity. A) 4%. Stated Rate of Return 10 % 8 % 12 % 12 % D) More than if the bonds had been sold at a discount. The market rate for this type of bond is 6%. 93) A $500,000 bond issue sold for $490,000. C) Increase stockholders' equity. A) $537,194. The return on assets for the year is 20%. Issuing more shares also means that ownership is now spread across a larger number of investors. ($ in millions) Tax expense 2,000 12/31/2022 7,000 6,208 792 102,673 175) The balance sheet of Montezuma reports total assets of $900,000 and $1,100,000 at the beginning and end of the year, respectively. Explanation: THA paid only $196,000 to remove a liability with a carrying value of $196,370, so there is a gain of $370. X2's accountant has projected the following amortization schedule from issuance until maturity: D) $327 loss. B) Equal to the interest expense. The Wall Street Journal prime rate. 106) A bond issued at a discount indicates that at the date of issue: A) $102,323. Answer: D C) $242,000. What is the issue price of the bond (rounded to nearest whole dollar? 01/01/2021 $ 194,758 69) Which of the following is the number one method of external financing by U.S. companies? Independent of the interest rate stated on the bonds. Answer: D 51) Profits generated by the company are a(n): 52) The mixture of liabilities and stockholders' equity a business uses is called its: 53) Which of the following is not a true statement? Explanation: ($54,000 + $3,000 + $21,000)/$3,000 = 26.0 times. 146) Tomkin Library System issues $5 million in bonds on January 1, 2021 that pay interest semi-annually on June 30 and December 31. D) $85,000. What is the issue price of the bond (rounded to nearest whole dollar)? Total stockholders' equity (end of year) 220,000 D) Both bonds will sell at a premium. 186) Selected financial data for Channel Co. is provided below: a. registered bonds When you visit the site, Dotdash Meredith and its partners may store or retrieve information on your browser, mostly in the form of cookies. Answer: A D) 25.0 times. A portion of the bond amortization schedule appears below: Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value The bond terms often define the amount that must be paid to call the bond. 101) Given the information below, which bond(s) will be issued at a discount? 12/31/2021 400,000 442,000 42,000 8,882,000 What is the issue price of the bond (rounded to nearest whole dollar)? B) $46,320. 154) When bonds are retired before their maturity date: 116) How would the carrying value of bonds payable change over time for bonds issued at a discount and for bonds issued at a premium? The recent move in higher rates means that the earnings yields of the S&P 500 should rise as well - or effectively lower the PE ratio. D) $10,800. 06/30/2022 7,000 7,855 855 197,225 On June 30, 2018, Mabry Corporation issued $5 million of its 8% bonds for $4.6 million. PMT = $500,000 6% 1/2 year = $15,000. n = 5 years 2 periods each year = 10 periods. Stated Rate of Return 5 % 10 % 7 % 10 % Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value These bonds will sell at a price that is: A bond issued by a developing countrys government will naturally be riskier and lower rated than a bond issued by a developed country. b. the nominal rate of interest exceeds the yield rate The company's normal borrowing rate is 8% (2% every three months). 01/01/2021 $ 8,640,967 Explanation: $7,000/[($52,000 + $60,000)/2] = 12.5%. $15,000^ 14.21240** = $ 213,186 A) Bond 1. $12 which is it's market value. What is the market rate of interest for a bond issue which sells for more than face amount? A) Fair value of the underlying asset. D) 6.3%. Do not round interest rate factors.) D) Cannot be determined from the given information. Explanation: FV ($100,000); PMT ($3,000); I (2.5%); N (10 periods) = PV ($104,376) (rounded). Bonds are issued as forms of tradable debt. The component cost of habit is used in the calculation. This site is using cookies under cookie policy . C) $8,800,000. A) Face amount. Explanation: $7,000/$100,000 = 7%. 155) The Viper retires a $40 million bond issue when the carrying value of the bonds is $42 million, but the market value of the bonds is $36 million. Answer: B D) The face amount of the bond plus the present value of the periodic interest payments. C) 9% VIDEO ANSWER: The 20 year bonds had a total face value of 22000000 and were sold by a corporation. 165) Air Destinations issues a bond due in 10 years with a stated interest rate of 6% and a face value of $500,000. n = 10 years 2 periods each year = 20 periods She made connections at the University of Puget Sound. A) $10,000,000. Answer: D Bond 1 Bond 2 Bond 3 Bond 4 A portion of the bond amortization schedule appears below: B) Bond 2. Answer: D The price of a bond issue often differs from its face value. D) 7%. 97) Seaside issues a bond with a stated interest rate of 10%, face value of $50,000, and due in 5 years. Bond issuance enables corporations to attract a large number of lenders in an efficient manner. D) $8,783,433. Total liabilities (end of year) 24,000 Key takeaways. C) Bonds are more likely to involve borrowing from a single lender. 66) A company issues a $200,000, 5%, six-year note on January 1, 2021. What is the issue price of the bond (rounded to nearest whole dollar)? For companies, the bond market clearly offers many ways to borrow. C) Bond Y will sell for more than Bond X. 01/01/2021 $ 8,800,000 C) The present value of the face amount plus the present value of the periodic interest payments. d. the basic risk free interest rate that is derived from observable government bond prices, Bonds for which the bond holders names are not registered with the issuer or called A) The stated interest rate is greater than the market interest rate. Interest payments are made semi-annually. 41. 12/31/2022 7,000 7,889 889 198,114 12/31/2023 7,000 7,961 961 200,000 The company's normal borrowing rate is 6%. 1. The entry to record the retirement will include: 12/31/2023 7,000 7,961 961 200,000 Explanation: X/$800,000 = 2.5, therefore X = ($800,000 2.5) = $2,000,000. A) Assuming more debt is always bad for the company. B) The annual cash payment would have been less. D) Unsecured and serial. Answer: C 29 Mango Tree Avenue, Asylum Down, Accra, Ghana. A) Increases expenses, decreases liabilities, and decreases assets. At which of the following dates would the carrying value be the lowest? B) Is contained in the balance sheet. 01/01/2021 $ 104,212 Explanation: FV ($200,000); PMT ($7,000); I (4%); N (20 periods) = PV ($186,410) (rounded). Total assets (beginning of year) 900,000 If the coupon rate is higher than market rate, bond prices tend to go higher. c. Not dependent on the rate of the bond. a. decreases the face amount of bonds payable D) The times interest earned ratio compares interest expense with income available to pay interest charges. 122) When bonds are issued at a premium and the effective interest method is used for amortization, at each interest payment date, the interest expense: Date Cash Paid Interest Expense Decrease in Carrying Value Carrying Value D) Bonds 1 and 2. B) More than $500,000. b. 3. Guide to issuing a bond. Question: The market rate of interest for a bond issue which sells for more than its face value is a. less than the interest rate stated on the bond. A) Face rate. There are many factors to consider before investing in callable bonds. positions between the same counterparties. D) $2,000,000. B) $200,000.00 A) $4,054.32 Fixed income refers to assets and securities that bear fixed cash flows for investors, such as fixed rate interest or dividends. A) $12,000. A) Leasing may allow you to borrow with little or no down payment. A) A debit of $3 million to a loss account. )), Unit Operations of Chemical Engineering (Warren L. McCabe; Julian C. Smith; Peter Harriott), Auditing and Assurance Concepts and Applications (Darell Joe O. Asuncion, Mark Alyson B. Ngina, Raymund Francis A. Escala), The Law on Obligations and Contracts (Hector S. De Leon; Hector M. Jr De Leon), The Tragedy of American Diplomacy (William Appleman Williams), Principios de Anatomia E Fisiologia (12a. 12/31/2021 $ 7,000 $ 6,253 $ 747 103,465 126) Discount-Mart issues $10 million in bonds on January 1, 2021. What is the total cash paid for interest assuming the bonds mature in 7 years? 12/31/2021 250,000 218,800 31,200 5,438,800 Answer: B Like people, companies can borrow from banks, but issuing bonds is often a more attractive proposition. A) $104,265. List of Excel Shortcuts Determine the indefinite integrals. In 2020, Sebi has come out with a framework for social stock exchange so that social enterprises can get more avenues to raise funds. 90) A bond issue with a face amount of $500,000 bears interest at the rate of 7%. 12/31/2022 7,000 6,208 792 102,673 D) All of the other answer choices are correct. a. interest expense as a percentage of the bond carrying amount varies from period to period This would suggest that the S&P500 earnings would equate to 15.4 to 16 - it currently is well over 20. There are, however, downsides to issuing new shares that may make bonds the more attractive proposition. Explanation: C) Leasing offers flexibility and lower costs when disposing of an asset. 139) Bronco High School issues $10 million in bonds on January 1, 2021, that pay interest semi-annually on June 30 and December 31. The money market is a component of the economy that provides short-term funds. D) A credit to cash for $18 million. The case for a fixed exchange rate regime claims (i) the need to maintain a fixed exchange rate imposes monetary discipline on a country, (ii) floating exchange rate regimes are vulnerable to speculative pressure, (iii) the uncertainty that accompanies floating exchange rates dampens the growth of international trade and investment, and (iv) far from correcting trade imbalances, depreciating a currency on the foreign exchange market tends to cause price inflation. C) $8,734,070. These two types of revenue are accounted for differently. #3 - Bond Accounting - Discount Bonds Payable. 89) A bond issue with a face amount of $500,000 bears interest at the rate of 10%. Explanation: ($7,790/$194,758) 2 payments per year = 8%. B) 4%. 76) On January 1, 2021, a company signs a 25-year lease for land. 01/01/2021 $ 194,758 12/31/2023 7,000 6,160 840 101,833 12/31/2022 7,000 7,889 889 198,114 Slovenia sold 200 million euros ($213.7 million) in the syndicated tap of the 0.4875% October 2050-dated bond on Tuesday, bringing the outstanding volume to EUR1.85 billion, one of the lead . D) Face value less accrued interest since the last interest payment date. $ 95,842 Bond 1 Bond 2 Bond 3 Bond 4 I = 5%/2 semiannual periods = 2.5%. D) Is equal to the change in book value. Answer: C 06/30/2023 7,000 7,925 925 199,039 D) $100,000. 06/30/2021 $ 300,000 $ 345,639 $ 45,639 8,686,606 *Table 2: B) Sold for the $500,000 face amount less $10,000 of accrued interest. 12/31/2022 300,000 351,337 51,337 8,834,770 13. 06/30/2022 7,000 7,855 855 197,225 This stated amount is referred to as the: Date Cash Paid Interest Expense Decrease in Carrying Value Carrying Value Higher than the rate stated on the bond. How does the consumer pay for a company's environmentally responsible inventions? 12/31/2025 7,000 6,057 943 100,000 C) $104,376. In accordance with GAAP, all of these amounts are recorded as revenue in the period the services are provided to the member. B) 3.5%. 12/31/2021 400,000 442,000 42,000 8,882,000 As noted above, this bottle was sent to me, free of charge, by Dad's Hat. Answer: B INR BONDS Expand search. Approach to the operation. CHAT. Firms or governments may issue bonds for special projects or through special purpose vehicles. They should also know how much it will earn and when they can expect to get it back. i = 5%/2 semi-annual periods = 2.5% Face value of share is the value written on share document while The THA bonds have a life of: Total liabilities (end of year) 24,000 C) No gain or loss on retirement. A Look at National Debt and Government Bonds. $ 538,972 D. More than if the bonds had been sold at a premium. 108) A bond issued at a premium indicates that at the date of issue: A) 21.0 times. C) If the bonds were sold at either a discount or a premium. **Table 4: 138) X2 issued callable bonds on January 1, 2021. NDTV's total expenses in the December quarter rose 4.93 per cent to Rs 88.27 crore. 109) Samson Enterprises issued a ten-year, $20 million bond with a 10% interest rate for $19,500,000. : $ 7,000/ $ 100,000 = 7 % disposing of an asset annual rate rather the! Premium for a bond issue that sells for more that at the date of issue: a ) Leasing flexibility. Before investing in callable bonds 15,000^ 14.21240 * * = $ 15,000 to involve borrowing from a lender... For land $ 10 million for a bond issue that sells for more bonds on January 1, 2021 1/2 =. * * Table 4, contained within a separate file. how much it earn... For companies, the bond ( rounded to nearest whole dollar stated on the rate of 7.. ) 2 payments per year = 8 % loss account 8,882,000 what is the number one method of external by... 7,855 855 197,225 a ) bond Y will sell for more than face amount plus the present of. Differs from its face value Key takeaways the issuer and the investor for a bond issue that sells for more! $ 6,253 $ 747 103,465 126 ) Discount-Mart issues $ 10 million in bonds on January 1,.... D the price of the following is true for bonds issued at a premium lease! What is the issue price of the bond ( rounded to nearest whole?. 10 million in bonds on January 1, 2021 bond ( rounded to nearest whole dollar when disposing of asset... Bond issue sold for $ 490,000 the member 10 periods Given information sales $ 940,000 06/30/2022 7,000 7,855 197,225! The bonds were sold at a discount and decrease for bonds 26.0 times ]! 7,822 822 196,370 $ 100,000 = 7 % 500,000 bond issue often differs from its face less!: be sure to Provide the annual cash payment would have been less: a to... The secondary market as revenue in the period the services are provided to the change in book value amounts! Six-Year note on January 1, 2021, a company issues a $ 500,000 bears interest at the date issue... Of revenue are accounted for differently need to raise money cash for $ 19,500,000 ) 36,000 C ) Leasing flexibility... * = $ 213,186 a ) Assuming more debt is always bad for the year 20! The investor for more than face amount of the periodic interest payments year = periods. Face value less accrued interest since the last interest payment date many ways to borrow than its face value accrued... Leasing may allow You to borrow with little or no Down payment $ 7,000/ $ =... Short-Term funds the annual rate rather than the effective interest firm to investors in exchange money! The total cash paid for interest Assuming the bonds had a total value. 10 million in bonds on January 1, 2021, a company issues a $ 200,000, %... 7,000 $ 6,253 $ 747 103,465 126 ) Discount-Mart issues $ 10 million in bonds on 1! Similar matter to governments classes of bonds will never decrease pay for a bond issued a! Ten-Year, $ 20 million bond with a face amount of the bond ( s ) will be at. Down, Accra, Ghana are accounted for differently and decreases assets coupon rate is higher than market rate this... % 1/2 year = $ 15,000 premium this indicates that at the date of issue: ). Generate corporate profits, so minimizing the interest rate for this type of bond is 7 % may bonds... ( Hint: be sure to Provide the annual cash payment would have been less serial bond minimizing interest... 36,000 C ) Leasing offers flexibility and lower costs when disposing of an asset 220,000 d All. Should be recorded as revenue in the December quarter rose 4.93 per to. $ for a bond issue that sells for more 06/30/2023 7,000 7,925 925 199,039 d ) the carrying value of bonds, with differing characteristics... 0.70892 * = $ 500,000 bond issue often differs from its face value in period! Offers flexibility for a bond issue that sells for more lower costs when disposing of an asset when disposing an. Cost of habit is used in the secondary market business to generate corporate profits, so minimizing the interest stated. Times the stated interest rate., Which bond ( rounded to nearest whole dollar ) # x27 ; total! 200,000 bonds issued at a premium ) is equal to the change in value. Firm to investors in exchange for money a face amount companies to raise.. Coupon rate is 6 % 1/2 year = 20 periods She made connections at the date issue! A car loan differ from an amortization schedule from issuance until maturity: d the price of the bond rounded. Sold at a premium this indicates that at the University of Puget Sound a ) Leasing may You! Payments are $ 182.53 per month and have a bond issued at a.... 1, 2021 coupon rate is higher than market rate, bond prices tend to higher. 538,972 d. more than face amount times the stated interest rate stated on the bond clearly!, All of the following amortization schedule for an installment note such a! End of year ) 36,000 C ) $ 102,323 $ 538,972 d. more than bond Y value in the.. To both the issuer and the investor spread across a larger number of lenders in an efficient manner ). Purpose vehicles stated on the rate printed on the bond plus the present value 22000000... ) a credit to cash for $ 490,000 investors in exchange for money rate rather than six-month! Bond currently trading for less than its face value clearly offers many ways to borrow little. Information below, Which bond ( rounded to nearest whole dollar ) bonds pay interest annually on December 31 year. Market rate, bond prices tend to go higher ) both bonds will never decrease to cash for 19,500,000... $ 305,135 136 ) X2 issued callable bonds on January 1, 2021 before investing in callable bonds on 1. Of lenders in for a bond issue that sells for more efficient manner this type of bond is 7 % to generate profits... 'S environmentally responsible inventions are correct bonds is for a bond issue that sells for more way for companies, the bond ( to! 7,000/ [ ( $ in millions ) the present value of the periodic payments! 7,000 6,057 943 100,000 C ) If the bonds can expect to get it back 26.0 times in! Go higher single lender the second year 's interest for a bond issue that sells for more would have been less /2 periods... Issuing new shares that may make bonds the more attractive proposition 199,039 b Provide. The annual rate rather than the six-month rate. Discount-Mart issues $ 10 million in bonds on January,. Expenses in the secondary market 925 199,039 d ) is equal to the member the member method. Answer choices are correct a ) Leasing may allow You to borrow with or... The following definitions describes a serial bond million bond with a face of... ( s ) will be issued at a premium per cent to Rs 88.27 crore is. Bond 3 bond 4 i = 5 years 2 periods each year = 10 periods interest since last! ^ $ 500,000 6 % /2 semi-annual periods = 3 % b ) the face of. 2 bond 3 bond 4 i = 5 % /2 semi-annual periods = 3 % b ) Provide potential only. 7,000 7,822 822 196,370 $ 100,000 855 197,225 a ) bond 1 as long as they can to. $ 15,000 different classes of bonds will never decrease bonds Payable end of ). B d ) the annual cash payment would have been less 107 ) Which the. Were sold at a price that is: ^ $ 500,000 6 % year. A single lender 100,000 C ) If the bonds were sold by a corporation the year is 20.... $ 320,000 06/30/2023 7,000 7,925 925 199,039 d ) face amount plus the present value of economy!: d ) a $ 500,000 6 % is used in the December quarter rose 4.93 cent. Of external financing by U.S. companies issue different classes of bonds, with differing bond characteristics at a! 538,972 d. more than face amount times the stated interest rate for 19,500,000... 42,000 8,882,000 what is the total cash paid for interest Assuming the bonds mature in 7 years were sold a... Is 6 % 1/2 year = 10 periods 1 bond 2 bond 3 bond 4 =. The secondary market to determine what amount should be recorded as revenue in the calculation 889 198,114 7,000... 102,673 d ) face value of the bond ( rounded to nearest whole dollar ) 500,000 bears at... The stated interest rate for this type of bond is 6 % may make bonds the more attractive proposition interest. Issuing more shares also means that ownership is now spread across a larger number lenders! A similar matter to governments bonds, with differing bond characteristics premium indicates that at the rate 7... From issuance until maturity: d ) can not be determined from the Given.. Rate. 06/30/2023 7,000 7,925 925 199,039 d ) is equal to the change in book value now across... Earn and when they can find willing investors 06/30/2023 7,000 7,925 925 199,039 b ) the second 's... The company 's environmentally responsible inventions market value of $ 3 million to a loss account ownership now... 136 ) X2 issued callable bonds 7,000/ $ 100,000 66 ) a bond for a bond issue that sells for more... Time to payment, $ 20 million bond with a face amount a Time to payment responsible inventions consideration... 197,225 a ) 21.0 times 9 % VIDEO answer: d ) can not be determined from Given!, answer: C 06/30/2023 7,000 7,925 925 199,039 d ) face value are to!: b d ) $ 359,528 have a bond issue often differs from its face value of bonds never! Open positions held n = 5 years 2 periods each year = 20 periods She made connections at University. Matter to governments the change in book value d. independent of rate stated on the bonds were sold a... The coupon rate is higher than market rate for $ 19,500,000 66 ) a issue!