Bond Face Value 500,000 Interest rat 6% Life 5 Years Interest is paid annually. - 12592

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yousafbhutta

yousafbhutta

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  • From: Business,
  • Posted on: Wed 18 Jul, 2012
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Request Description

 

Bond Face Value 500,000

 

Interest rat 6%

 

Life  5 Years

 

Interest is paid annually.

 

 

 

1.      Calculate the issue price of the bond under the following circumstances.

 

Market interest rate is 6%

 

Market interest rate is 7%

 

Market interest rate is 4%

 

 

 

For the following, assume the market interest rate was 7% when the bond was issued.

 

2.      Record the entry to issue the bond.

 

3.      Record the entry to pay interest for each of the 5 years the bond is outstanding

 

4.      Record the entry to retire the bond.

 

5.      What is the carrying value of the bond at the end of year 3.

 

Solution Description

 

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