Question: Please show all steps - thankyou 1.) Paul Co. begin operations on 1/1/06 by issuing a 3.00 year term (Bullet) bond with a par value
Please show all steps - thankyou
1.) Paul Co. begin operations on 1/1/06 by issuing a 3.00 year term (Bullet) bond with a par value of $3,800,000. The bond pays interest semi-annually. On the date of issuance, the annual coupon rate of the bond is 5.250% while the annual required rate of return in the debt capital markets (the discount rate) is 6.5%. Paul assumes that he will earn $1,700,000 in cash revenues and incur cash operating expenses of 47.000% of revenues each 6 month period for the next 3.00 fiscal years. The corporate tax rate is assumed to be 35.00%.
1) Create an amortization table for the bond.
2) What is the Price of the bond? What is the value of any discount or premium?
3) Provide all journal entries and T-accounts for this transaction over the next 3 years.
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