Question
Suppose that on December 31, 2021, Netflix issued a bond with the following terms Face Value $4,000,000 Maturity 20 years Coupon Rate (annualized) 6% Compounding
Suppose that on December 31, 2021, Netflix issued a bond with the following terms
Face Value $4,000,000 Maturity 20 years Coupon Rate (annualized) 6% Compounding Period Semi-annual Market interest rate (annualized) 5% Answer the following questions for this bond What are the semi-annual coupon payments of the bond? What will the principal payment of the bond be at the end of the 20 years? What is the present value of the coupon payments, rounded to the nearest dollar? What is the present value of the principal payment, rounded to the nearest dollar? What is the issue price of the bond (both the coupon payments and the principal payment) rounded to the nearest dollar? Is there a premium on the bonds payable or a discount on the bonds payable at the time of issuance? What is the amount of premium or discount on bonds payable at the time of issuance? What is the interest expense for the first coupon payment? How much is the amortization of the Premium on Bonds Payable/Discount on Bonds Payable for the first coupon payment? (i.e. how much does the Premium/Discount decrease for the first coupon payment?)
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