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Can't figure it out!!! Exercise I. Rodriguez Inc. issued $100,000 in bonds, 8% semi-annual, 5 years. The effective interest rate (market) is 10% semi-annual. Interest
Can't figure it out!!!
Exercise I. Rodriguez Inc. issued $100,000 in bonds, 8% semi-annual, 5 years. The effective interest rate (market) is 10% semi-annual. Interest is payable semi-annually on July 1 and January 1. Rodriguez, Inc. uses "effective" to amortize the premium or discount of the bond. Instructions: -Determine the present value of the simple sum. - Compute the annuity (interest payable). -Determine the present value of the annuity -Determine the present value of the bond. - Complete the amortization table. - Prepare daily entries for the issuance of the bond and the first cycle (interest payment). Everything should be rounded to the nearest integer. - They can use the present value function in Excel to work with the exercise. A. If the contract rate is 15% and the market rate is 12%, the bond was issued with: B. If the contract rate is 12% and the market rate is 15%, the bond was issued with: C. If the contract rate is 12% and the market rate is 12%, the bond was issued with: D. Contrast and compare the following: -"Term Bond vs Serial Bond". -"Callable Bond vs. Convertible Bond. "Secure Bond vs. Unsecured Bond". "Effective vs Straight Line Method of Amortization of Bond". In questions abus you must say if it was issued with a premium, discount or at par. Amortization Table: - Period - Cash Paid (Interest Paid) - Interest Expenses - Amortization (premium or discount) - Present value of the bond General Journal: -Date-Description - Dr.-Cr Step by Step Solution
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