QuizSavedHelpSave & ExitSubmitCheck my workCalculate the purchase price of the $1,000 face value bond using the information given below. (Do not round the intermediatecalculations. Round your final answer to 2 decimal places.)Maturity dateDec 15, 2022Market rate (%)7.7Issue datePurchase dateCoupon rate (%)5.65:00Dec 15, 1987June 15, 2ee5Assume that• Bond interest is paid semiannually.• The bond was originally issued at its face value.Bonds are redeemed at their face value at maturity• Market rates of return are compounded semiannually.Bond price$4

Face Value = 1000 Semi Annual Compounding Market Rate = 7.7%/2 = 3.85% Coupon = Coupon Rate / 2 ×…

Calculate the purchase price of the $1,000 face value bond using the information given below. (Do not round the intermediate calculations. Round your final answer to 2 decimal places.) Issue date Maturity date Purchase date Coupon rate (X) Market rate (X) Dec 15, 1987 Dec 15, 2022 June 15, 2005 5.65 7.7 Assume that • Bond interest is paid semiannualy • The bond was originally issued at its face value Bonds are redeemed at their face value at maturity. • Market rates of return are compounded semiannually.- Bond price %24

Calculate the purchase price of the $1,000 face value bond using the information given below. (Do not round the intermediate calculations. Round your final answer to 2 decimal places.) Issue date Maturity date Purchase date Coupon rate (X) Market rate (X) Dec 15, 1987 Dec 15, 2022 June 15, 2005 5.65 7.7 Assume that • Bond interest is paid semiannualy • The bond was originally issued at its face value Bonds are redeemed at their face value at maturity. • Market rates of return are compounded semiannually.- Bond price %24

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter11: Bond Pricing And Amortization (bonds)

Section: Chapter Questions

Problem 8R: a. Reset the Data Section to its initial values. The price of this bond is 1,407,831. What would it...

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a. Reset the Data Section to its initial values. The price of this bond is 1,407,831. What would it be if there were only 9 or 8 years to maturity? Use the worksheet to compute the bond issue prices and enter them in the spaces provided. Bond issue price (9 years to maturity) __________________ Bond issue price (8 years to maturity) __________________ b. Compare these prices to the bond-carrying values found in the effective interest amortization schedule you originally printed out in requirement 3. Explain the similarity. c. Click the Chart sheet tab. The chart presented shows the price behavior of this bond based on years to maturity. Explain what effect years to maturity has on bond prices. Check your explanation by trying 8% as the effective rate (cell E10) and clicking the Chart sheet tab again. Also try 9%. When the assignment is complete, close the file without saving it again. Worksheet. Modify the BONDS3 worksheet to accommodate bonds with up to 20-year maturity. Use your new model to determine the issue price and amortization schedules of a 2,000,000, 18-year, 10% bond issued to yield 9%. Preview the printout to make sure that the worksheet will print neatly, and then print the worksheet. Save the completed file as BONDST. Hint: Expand both amortization schedules to 20 years. Expand the scratch pad to 20 years. Modify FORMULA1 in cell F17 to include the new ranges. Chart. Using the BONDS3 file, prepare a line chart that plots annual interest expense over the 10-year life of this bond under both the straight-line and effective interest methods. No Chart Data Table is needed. Put A23 to A32 in the Label format and then select A23 to A32, D23 to D32, and B40 to B49 as a collection. Enter all appropriate titles, legends, formats, and so forth. Enter your name somewhere on the chart. Save the file again as BONDS3. Print the chart.
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Sheridan Inc. is building a new hockey arena at a cost of $2,150,000. It received a down payment of $430,000 from local businesses to support the project, and now needs to borrow $1,720,000 to complete the project. It therefore decides to issue $1,720,000 of 10- year, 10.5% bonds. These bonds were issued on January 1, 2023, and pay interest annually on each January 1. The bonds yield 10.5% to the investor and have an effective interest rate to the issuer of 10.40530%. (There is an increased effective interest rate due to the capitalization of the bond issue costs.) Any additional funds that are needed to complete the project will be obtained from local businesses. Sheridan paid and capitalized $43,000 in bond issuance costs related to the bond issue. Sheridan prepares financial statements in accordance with IFRS.
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