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kaheart [24]
3 years ago
15

Coupon payments are fixed, but the percentage return that investors receive varies based on the market conditions. this percenta

ge return is referred to as bonds yield.
Yield to Maturity (YTM) is the rate of return expected from a bond held until its maturity date. However, the YTM equals the expected rate of return under certain assumptions. which of the following is one of these assumptions ?

(a)The probability of default is zero

(b)The bond is callable

Business
1 answer:
AnnZ [28]3 years ago
6 0

Answer:

a)The probability of default is zero

Explanation:

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3 years ago
The Bradford Company issued 12% bonds, dated January 1, with a face amount of $87 million on January 1, 2021. The bonds mature o
kakasveta [241]

Answer:

1. $77,783,220

2. Jan-21

Dr Cash $ $77,783,220

Dr Discount On Bond $9,216,780

Cr Bond Payable $ $87,000,000

Explanation:

1. Calculation to Determine the price of the bonds at January 1, 2021.

First step is to calculate the Present Value Of Annual Interest

a Semi-annual Interest Amount $5,220,000

($87,000,000*12%/2)

b PV Annuity Factor for (20 Years,14%/2=7%) 10.5940

c Present Value Of Annual Interest (a*b) $ $55,300,680

($5,220,000*10.5940)

Second step is to calculate Present Value Of Redemption Amount

a Redemption Value $ $87,000,000

b PV Factor Of (20 Years,7%) 0.25842

c Present Value Of Redemption Amount (a*b) $ $22,482,540

($87,000,000*0.25842 )

Now let Determine the price of the bonds at January 1, 2021.

Intrinsic Value ( Price ) Of The Bond = ($55,300,680+$22,482,540)

Intrinsic Value ( Price ) Of The Bond =$77,783,220

Therefore the price of the bonds at January 1, 2021 is $77,783,220

2. Preparation of the journal entries to record their issuance by The Bradford Company on January 1, 2021,

Jan-21

Dr Cash $ $77,783,220

Dr Discount On Bond $9,216,780

($87,000,000-$77,783,220)

Cr Bond Payable $ $87,000,000

(Being to record issuance of bond)

3. Preparation of the journal entries to record their issuance by The Bradford Company on ion June 30, 2021

Jun-30

Dr Interest expenses $ 53,82,240

Discount On Bond payable $ 2,22,240

Cash $5,220,000

4.Preparation of the journal entries to record their issuance by The Bradford Company on

December 31, 2021

Dec-31 Interest expenses $ 53,97,797

Discount On Bond payable $ 2,37,797

Cash $5,220,000

( to record interest payment)

6 0
3 years ago
How is the American Disability Act important in the health field
Stels [109]
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4 0
3 years ago
In its first month of operation, Tamarisk, Inc. purchased 230 units of inventory for $8, then 330 units for $9, and finally 270
aivan3 [116]

Answer:

Phantom profit= $500

Explanation:

Giving the following information:

Purchased: 230 units for $8

Purchased: 330 units for $9

Purchased: 270 units for $10.

At the end of the month, 310 units remained.

The method with the highest ending inventory will result in the lowest cost of goods sold.

First, we need to calculate the ending inventory under FIFO method.

FIFO (first-in, first-out):

Ending inventory= 270*10 + 40*9= $3,060

Now, we calculate the ending inventory under the LIFO method and compare it with FIFO.

LIFO (last-in, first-out)

Ending inventory= 230*8  + 80*9= $2,560

Phantom profit= 3,060 - 2,560= $500

8 0
3 years ago
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