Cxcrcise 14-11 Your ancwer ie partially correct. Try again Carla Tnc. has issed

Question

Cxcrcise 14-11 Your ancwer ie partially correct. Try again Carla Tnc. has issed three tynes ot deht nn lanuary 1, 2017, the start ot the company's tscal year. (a) $12 million, 9-year, 13% unsecured bonds, interest payable quarterly. Bonds were priced to yield 10%. (b) 25 million p r ofycar, zcro coupon bonds t pricc to yicld 1090 pcr ycar (c) 10 million , 9-year, 9% mortgage bonds, interest payable annually to yield 10%. Prepare a schedule that identifies the following iteme for each bond: (1) maturity value, (2) number of interect periods over life of bond, (3) etated rate per each interest period, (1) effective-interect rate per each interest period, (5) payment am period, and (6) present value of bonds at date of issue. (Round stated and effective rate per period to 2 decmal places, e.g. 10.25o. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answ decimal places c.g. 58,971.) Unsecured Bonds Zero-Coupon Bonds Mortqaqe Bonds (I) Maturity value (2) Number of interest periods (3) Stated rate per period (4) Effective rate per period 120 18uuUUUO R6 (5) Payment·mount pcr pcriod 1G20000 () Present value 102369990.19 11 1267R8.n3 LINK TO TEXT

Explanation / Answer

1-

Maturity value

12000000

interest period

36

stated rate per period

3.25

effective rate per period

2.50%

Payment amount per period =12000000*3.25%

390000

present value

390000*23.55625 +12000000*.411094

14120066

PVAF aat 2.5% for 36 period

1-(1+r)^-n /r

1-(1.025)^-36 /.025

23.55625

PVF at 2.5% for 36th period

1/(1+r)^n

1/1.025^36

0.411094

2-

Maturity value

25000000

interest period

0

stated rate per period

0

effective rate per period

10%

Payment amount per period =12000000*3.25%

0

present value

25000000/1.10^9

10602440

value of zero oupon bond

face value/(1+r)^n

25000000/1.10^9

1-

Maturity value

18000000

3-

interest period

9

stated rate per period

9

effective rate per period

10.00%

Payment amount per period =12000000*3.25%

1620000

present value

1620000*5.759024 +12000000*.424098

14418795

PVAF aat 10 % for 9period

1-(1+r)^-n /r

1-(1.1)^-9/.1

5.759024

PVF at 10% for 9 th period

1/(1+r)^n

1/1.1^9

0.424098

1-

Maturity value

12000000

interest period

36

stated rate per period

3.25

effective rate per period

2.50%

Payment amount per period =12000000*3.25%

390000

present value

390000*23.55625 +12000000*.411094

14120066

PVAF aat 2.5% for 36 period

1-(1+r)^-n /r

1-(1.025)^-36 /.025

23.55625

PVF at 2.5% for 36th period

1/(1+r)^n

1/1.025^36

0.411094

2-

Maturity value

25000000

interest period

0

stated rate per period

0

effective rate per period

10%

Payment amount per period =12000000*3.25%

0

present value

25000000/1.10^9

10602440

value of zero oupon bond

face value/(1+r)^n

25000000/1.10^9

1-

Maturity value

18000000

3-

interest period

9

stated rate per period

9

effective rate per period

10.00%

Payment amount per period =12000000*3.25%

1620000

present value

1620000*5.759024 +12000000*.424098

14418795

PVAF aat 10 % for 9period

1-(1+r)^-n /r

1-(1.1)^-9/.1

5.759024

PVF at 10% for 9 th period

1/(1+r)^n

1/1.1^9

0.424098

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