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Attached please find the Income Statement, Balance Sheet, and footnote 3 on Debt from Chesapeake Energys 2017 10K. All rates shown in the footnote are

Attached please find the Income Statement, Balance Sheet, and footnote 3 on Debt from Chesapeake Energys 2017 10K. All rates shown in the footnote are Coupon Rates. Assume annual compounding. Answer the following questions.

l. Show the 2017 journal entry that the firm made for the 5.5% senior secured notes due 2026 (row 13 in the footnote).

2. What is the effective r% on these bonds? You must show your calculation.

3. Calculate the firms ratio of LT Debt net/end of year total assets. 4. Assume that these bonds were redeemed for cash for 102% of par at the beginning of the year. Recalculate the ratio in #3.

5.Repeat # 4 assuming that the bonds were swapped for new bonds at 102% of par.

image text in transcribedimage text in transcribed CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - (Continued) Our long-term debt consisted of the following as of December 31, 2017 and 2016: (a) The carrying amounts as of December 31, 2017 and 2016, include premium amounts of $479 million and $990 million, respectively, associated with a troubled debt restructuring. The premium is being amortized based on the effective yield method. (b) We are required to account for the liability and equity components of our convertible debt instruments separately and to reflect interest expense through the first demand repurchase date, as applicable, at the interest rate of similar nonconvertible debt at the time of issuance. The applicable rates for our 2.25% Contingent Convertible Senior Notes due 2038 and our 5.5\% Convertible Senior Notes due 2026 are 8.0% and 11.5%, respectively. (c) The conversion and redemption provisions of our convertibie senior notes are as follows: Optional Conversion by Holders. Prior to maturity under certain circumstances and at the holder's option, the notes are convertible. The notes may be converted into cash, our common stock, or a combination of cash and common stock, at our election. One triggering circumstance is when the price of our common stock exceeds 82

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