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On July 1, 2015, ABC Co. issued 10-year, $4,574 million maturity value, 3% coupon bonds when the market rate was 2% for a cash price
On July 1, 2015, ABC Co. issued 10-year, $4,574 million maturity value, 3% coupon bonds when the market rate was 2% for a cash price of $4,994 million. Interest was payable semi-annually on Dec. 31 and June 30. ABC also issued $3,527 million face value, 20-year, zero coupon bonds on July 1, 2017 that mature June 30, 2037 for a cash price of $2,619 million. The effective market interest rate at issuance was 1.5%. ABC repurchased $1,143 million face value coupon bonds on June 30, 2020 for $1,220 million cash (after interest was paid) and $582 million in face value of the zero- coupon bonds on June 30, 2021 for a purchase price of $432 million cash. Review what you have learned about coupon bonds as well as zero coupon bonds and answer the following questions, expressing all numbers in millions (for example, the face amounts of the bonds are $4,574 and $3,527, respectively, and the interest payments on the coupon bond are $69 ). Please answer in complete sentences and show your calculations for numerical answers and journal entries. Please do not use decimals in any of your answers (Round to millions including interest payments on the coupon bond before computing the present value). Show the calculations for how the cash prices were determined for both bond
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