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3 years ago

13

Jim buys a 5 percent bond in the amount of $100. If the market interest rate increases to 10 percent Jim can sell his bond for u

p to:

1 answer:

Sedaia [141]3 years ago

3 0

Answer:

$50

Explanation:

Jim buys a 5% bond

The amount is $100

The market interest rate increases to 10%

Therefore the price at which the bond cann be sold is calculated as follows

= 5×100

= 500×0.01

= 50

Hence it can be sold for $50

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Carla vista co. received proceeds of 5585020 on a 10-year, 8% bonds issued on January 1, 2019. The bonds had a face value of 530

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The carrying value of the bond is $489,560.

<h3>What is the carrying value of a bond?</h3>

A bond's carrying value is defined as its par value or face value plus any unamortized premiums or discounts, minus any unamortized discounts.

This is deducted because it is represented on the balance sheet, the carrying value is the difference between the par value and the premium or discount.

<u>Computation of Carrying value of Bond</u>:

According to the given information,

First, there is a need to calculate the premium amount, that amount is calculated as follows:

Premium Amount = Face value of Bond – Proceeds received

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Then, the carrying value of the bond will be:

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Therefore, the carrying value of the bond is $489,560.

Learn more about the carrying value of bond, refer to:

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