Question
Consider the following financial statement for 2016 and 2017: 2017 2016 7% debentures, $300 million face value, due in 2025, effective rate 14% $ 186.4m
| Consider the following financial statement for 2016 and 2017: | 2017 | 2016 | |||||
| 7% debentures, $300 million face value, due in 2025, effective rate 14% | $ 186.4m | $ 182.9m | |||||
| Zero coupon bond, $500 million face value, due in 2019, effective rate 12% | $ 260.7m | $ 282.1m | |||||
| Mortgage debt, $850 million face value, due in 2033, effective rate 8% | $ 834.8m | $ 845.7m | |||||
| Total Debt | $ 1,281.9m | $ 1,310.7m | |||||
Based on the financial statement, please explain the following:
- Why does the debenture bond have a higher interest rate than the mortgage debt?
- How much interest did the company pay during 2017 for the debenture bond?
- How much principal was paid off from 2016 to 2017 for the debenture bond?
- How much of the principal was paid off for the Mortgage bond from 2016 to 2017?
- How much interest did the company pay during 2017 for the zero coupon bond?
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The Social Profit Handbook
Authors: David Grant
1st Edition
1603586040, 978-1603586047
