Ask Question
29 September, 18:20

Canglon, Inc., issues 10%, 5-year bonds with a face value of $150,000 when the effective rate is 12%. Interest is to be paid semiannually on June 30 and December 31. Assume Canglon uses the effective interest method to amortize the discount. Prepare calculations to prove that the selling price of the bonds is $138,959.90.

+1
Answers (1)
  1. 29 September, 22:12
    0
    Base on the scenario been described in the question, the calculation is done using this method

    Particulars

    Present value of principal

    Add: present value of interest

    Selling prices of bonds

    Amount (A)

    $150,000

    $7,500

    Present value factor (B)

    O. 558395

    7.360087

    Value of the bonds (A * B)

    $83,759.25

    $55,200.65

    $138,959.90

    Bond is said to be the long term promissory notes issued by company as the the lend money from investors to raise money that will be use in financing their operations.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Canglon, Inc., issues 10%, 5-year bonds with a face value of $150,000 when the effective rate is 12%. Interest is to be paid semiannually ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers