Twixt Corp. issued $5,210,000 of convertible bonds on 1 January for $4,995,000 cash. The bond had the
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Question:
Twixt Corp. issued $5,210,000 of convertible bonds on 1 January for $4,995,000 cash. The bond had the following terms:
- Bonds mature in five years’ time.
- Annual interest, 5%, is paid each 31 December.
- Bonds are convertible to 521,000 common shares at maturity or can be repaid in cash. This choice is up to Twixt Corp.
Current market interest rates are 6%.
(PV of $1, PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.)
Required:
1. Assign a value to the liability and the equity portions of the bond. (Round time value factor to 5 decimal places and final answers to the nearest dollar amount.)
Related Book For
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
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