Question
Bonds XYX Company is preparing to issue $1,000,000 in 8% bonds that pay interest semi-annually and mature in five years. 1. Interest rates for companies
Bonds
XYX Company is preparing to issue $1,000,000 in 8% bonds that pay interest semi-annually and mature in five years.
1. Interest rates for companies with XYZs risk profile have fallen following the bond registration. If the market will accept a 6% rate, what should XYZ expect to receive for their bonds?
- Prepare XYZs journal entry for the issue of the bonds on 01/01/2018.
- Prepare XYZs journal entry for the first interest payment on 06/30/2018.
2. Interest rates for companies with XYZs risk profile have risen following the bond registration. If the market will accept a 10% rate, what should XYZ expect to receive for their bonds?
- Prepare XYZs journal entry for the issue of the bonds on 01/01/2018.
- Prepare XYZs journal entry for the first interest payment on 06/30/2018.
3. Assuming that 8% is a reasonable rate, what should XYZ expect to receive for their bonds if they carried a zero coupon rate??
- Prepare XYZs journal entry for the issue of the bonds on 01/01/2018.
- Prepare XYZs journal entry for the first interest payment on 06/30/2018.
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Sawyer's Internal Auditing The Practice Of Modern Internal Auditing
Authors: Lawrence Sawyer, Mortimer Dittenhofer, James Scheiner
5th Edition
0894131788, 978-0894131783
