The following information appeared in the 2011 annual report of Rumours, Inc Long Term Debt Rumours, Inc issued $10 million 10 coupon bonds on January 1, 2008, due on December31, 2012 The prevailing market interest rate on January 1, 2008, was 12 , and the bonds pay interest on June 30 and December...

Requirement 1 The carrying values of both bonds in each of the two years presented is simply equal to the present value of the principal and interest payments discounted over the remaining life of the ...

The following information appeared in the 2011 annual report of Rumours, Inc.: Long-Term Debt [Rumours, Inc. issued]

Question:

The following information appeared in the 2011 annual report of Rumours, Inc.:

Long-Term Debt
[Rumours, Inc. issued] $10 million. 10% bonds on January 1, 2008, due on December31, 2012. The prevailing market interest rate on January 1, 2008, was 12%, and the bonds pay interest on June 30 and December 31 of each year.
On January 1, 2009, [Rumours issued] 510 million, 10% bonds due on December 31, 2013. The prevailing market interest rate on January 1, 2009, was 8%, and the bonds pay interest on June 30 and December31 of each year.
Required s
1. See the following (incomplete) (able for each bond€™s carrying value. Calculate the missing values.

2. How much interest expense did Rumours record in 2011 on the bonds due in 2012?
3. How much interest expense did Rumours record in 2011 on the bonds due in2013?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...