Monty Inc. has issued three types of debt on January 1, 2017, the start of the c

Question

Monty Inc. has issued three types of debt on January 1, 2017, the start of the company's fiscal year. (a) (b) (c) $11 million, 9-year, 14% unsecured bonds, interest payable quarterly. Bonds were priced to yield 12% $25 million par of 9-year, zero-coupon bonds at a price to yield 12% per year. $16 million, 9-year, 10% mortgage bonds, interest payable annually to yield 12%. Prepare a schedule that identifies the following items for each bond: (1) maturity value, (2) number of interest periods over life of bond, (3) stated rate per each interest period, (4) effective-interest rate per each interest period 5 payment amount per period, and 6) present value of bonds at date of issue Round state and effective rate per period to 2 decima paces e 9-10.25% Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to o decimal places e.g. 58,971.) Unsecured Bonds Zero-Coupon Bonds Mortgage Bonds (1) Maturity value (2) Number of interest periods (3) Stated rate per period (4) Effective rate per period (5) Payment amount per period (6) Present value Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

Unseued Bond Zero Coupan Bond Mortgage Bond Maturity Value $                    11,000,000 $                25,000,000 $                   16,000,000 No. of Interest Periods (term *No. Of payments per year) 36 9 9 Stated Rate per period 3.5% (14% *3/12) 0 10% Effective Rate per Period 3% (12%*3/12) 12% 12% Interest Payment Amount (Maturity Value * Stated rate per period) $                          385,000 $                                  -   $                     1,600,000 Present Value $1,22,00,320 (Note 1) $90,15,000 (Note 2) $1,42,94,720 (Note3) Note 1 Present value of Unsecured bond Present Value of Face value Face Value * P.V factor @ 3% for 36 period (11000000 * 0.3450) $                     3,795,000 Present Value of Interest Payment Interest Amount * P.V. Factor of annuity@3% for 36period (385000 * 21.832) $                     8,405,320 Present Value of Unsecured Bond $                   12,200,320 Note 2 Present value of Zero Coupan bond Present Value of Face value Face Value * P.V factor @ 12% for 9years (25000000 * 0.3606) $                     9,015,000 Present Value of Interest Payment Interest Amount * P.V. Factor of annuity@12% for 9years 0 * 5.3282) $                                    -   Present Value of Zero Coupan Bond $                     9,015,000 Note 3 Present value of Mortgage bond Present Value of Face value Face Value * P.V factor @ 12% for 9years (16000000 * 0.3606) $                     5,769,600 Present Value of Interest Payment Interest Amount * P.V. Factor of annuity@12% for 9years (1600000 * 5.3282) $                     8,525,120 Present Value of Mortgage Bond $                   14,294,720

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