Chapter 10 hw

# Chapter 10 hw - M10-2 Single Payment \$600,000 X 0.4564=...

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M10-2 Single Payment: \$600,000 X 0.4564= 273,840 Annuity: ((\$600,000 X 0.08)/2) X 13.5903= 326,167.2 Issuance Price: 600,007.2 M10-3 20 payment periods, 6% interest Single Payment: \$900,000 X .4350 = 391,500 Annuity: ((900,000 X .06)/2) X 13.2944 = 358,948.8 Issuance Price: 750,448.8 M10-4 Jan 1, 2009 Cash (+A) \$940,000 Discount on bonds payable (+XL, - L) 60,000 Bonds Payable (+L) 1,000,000 Jun 30, 2009 Interest expense (+E, - SE) 51,700 Discount on bonds payable (-XL, +L) 1,700 Cash (-A) 50,000 M10-5 Jan 1, 2009 Cash (+A) \$580,000 Discount on bonds payable (+XL, - L) 20,000 Bonds Payable (+L) 600,000 Jun 30, 2009 Interest expense (+E, - SE) 31,000 Discount on bonds payable (-XL, +L) 1,000 Cash (-A) 30,000 E10-2 Bonds Yield Close 7.3 89.5 This means that the bonds sold by AT&T has a interest rate of 6.5% when the market interest rate is 7.3%, and has a selling price of 89.5% of par. For bonds with \$10,000 face value, I would pay \$8,950. This means that the company will get less cash up front, but does not have any impact on the company,

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## This note was uploaded on 10/21/2009 for the course H ADM 223 taught by Professor Pstrebel during the Spring '07 term at Cornell.

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Chapter 10 hw - M10-2 Single Payment \$600,000 X 0.4564=...

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