On January 1, 2024, Tropical World issues $40.5 million of 7% bonds, due in 10 years, with
Question:
On January 1, 2024, Tropical World issues $40.5 million of 7% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. The proceeds will be used to build a new ride that combines a roller coaster, a water ride, a dark tunnel, and the great smell of outdoor barbeque, all in one ride.
Required: 1-a. If the market rate is 6%, calculate the issue price. (FV of $1, PV of $1, FVA of $1, and PVA of $1) 1-b. Will the bonds issue at face amount, a discount, or a premium?
Face amount | $40,500,000 |
interest payment | |
number of periods | |
market interest rate | |
issue price |
2-a. If the market rate is 7%, calculate the issue price. (FV of $1, PV of $1, FVA of $1, and PVA of $1) 2-b. Will the bonds issue at face amount, a discount, or a premium?
Face amount | $40,500,000 |
interest payment | |
number of periods | |
market interest rate | |
issue price |
3-a. If the market rate is 8%, calculate the issue price. (FV of $1, PV of $1, FVA of $1, and PVA of $1) 3-b. Will the bonds issue at face amount, a discount, or a premium?
Face amount | $40,500,000 |
interest payment | |
number of period | |
market interest rate | |
issue price |
Expert Answer:
Financial Accounting
ISBN: 978-0078025549
3rd edition
Authors: J. David Spiceland, Wayne Thomas, Don Herrmann
