Practice Problems - Chapters 10 & 11

Practice Problems - Chapters 10 & 11 - The market...

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Unformatted text preview: The market price of a bond issued at a discount is the present value of its principal amount at the market (effective) rate of interest a. Minus the present value of all future interest payments at the market (effective) rate of interest. b. Minus the present value of all future interest payments at the rate of interest stated on the bond. c. Plus the present value of all future interest payments at the market (effective) rate of interest. d. Plus the present value of all future interest payments at the rate of interest stated on the bond. The following information pertains to Camp Corp.s issuance of bonds on July 1, 2009: Par Amount $1,000,000 Term 10 years Coupon rate 6% Interest payment dates annually on July 1 Market Rate when issued 9% What should the issue price be for the bonds? What is the journal entry to record the issuance? What is the journal entry to record the first interest payment? What would the journal entry for the first interest payment be if the bonds were issued at par?par?...
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Practice Problems - Chapters 10 & 11 - The market...

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