Answer:
c.a $1,000 bond sold for $1,012.50.
Explanation:
We assume the par value is $1,000 and since the bond is issued at 101.25 that means its selling price is
= $1,000 × 101.25%
= $1,012.50
Since the bond is issued more than the face value that reflects the premium and if the bond is issued less than the face value so it is issued at a discount
So the right option is c.
Answer: $4,642.37
The price of the bond is $4,642.37
Explanation:
Using the price of bond formula :
C × 1 - (1+r) *-n / r. + F / (1+r)*n
C = coupon rate = 2.9% of 10,000
= $290
n = 24years...... years to maturity
F = $10,000...... Face value/par value
r = yield to maturity = 3.4% = 0.034
Price of bond =
290 × 1–(1+0.034)*-24 /0.034
+ 10,000 / (1.034)*24
290× 1 - (1.034)*-24 / 0.034
+ 10,000 / (1.034)*24
290 × (1 - 0.448236347)
+ 4,482.36347
160.011459 + 4,482.36347
Price = $4,642.37 as the price of bond.
Answer:
If an = 3n - 2 , find a2
Explanation:
If an = 3n - 2 , find a2If an = 3n - 2 , find a2
Answer:
d. $5,400
Explanation:
The computation of the interest expense is shown below:
As
Interest Expense is
= $50,000 × 10%
= $5,000
And,
Amortization Expense is
= ($50,000 - $46,000) ÷ 10 years
= $400
So,
Total Bond Interest Expense is
= Interest expense + amortization expense
= $5,000 + $400
= $5,400
We simply added the interest expense and the amortization expense so that the total bond interest expense could come
