Fall 2013_Acc 3100_Ch 14

Date 1 1 13 6 30 13 12 31 13 6 30 14 12 31 14 6 30

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Unformatted text preview: ds. Date 1/ 1/ 13 6/ 30/ 13 12/ 31/ 13 6/ 30/ 14 12/ 31/ 14 6/ 30/ 15 12/ 31/ 15 Cash $ 42,000 42,000 42,000 42,000 42,000 42,000 $ 252,000 Effective Interest $ Increase in Balance 46,664 $ 46,991 47,340 47,714 48,114 48,544 * $ 285,367 $ 4,664 4,991 5,340 5,714 6,114 6,544 33,367 Outstanding Balance $ 666,633 671,297 676,288 681,628 687,342 693,456 700,000 * Rounded. $666,633 + $4,664 = $671,297 $666,633 + $4,664 = $671,297 14-9 Zero­Coupon Bonds These bonds do not pay interest. T bonds do not pay interest. IInstead, they offer a return in the form of a deep discount from the orm of a deep discount from the fface amount. ace amount. 14-10 Bond Issued at Premium On January 1, 2013, Masterwear Industries issued $700,000 of 12% bonds, dated January 1. Interest is payable semiannually on June 30 and December 31. The bonds mature in three years. The market yield for bonds of similar risk and maturity is 10%. 10% The entire bond issue was purchased by United Intergroup. Present value of an ordinary annuity of $1: n=6, i=5% Calculation of the Price of the Bonds Interest Principal $ 42,000 × 5.0756...
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