engineering economics

A) A company has issued 10-year bonds, with a face value of $1,000,000 in $1000 units. Interest at 8% is paid quarterly. If an investor desires to earn 12% nominal interest (compounded quarterly) on $10000 worth of these bonds, what would the purchase price have to be? (5.3)

B) If the company plans to redeem these bonds in total at the end of 10 years and establishes a sinking fund that earn 8%, compounded semi-annually, for this purpose, what is the annual cost of interest and redemption? (5.5)

  1. 👍 0
  2. 👎 0
  3. 👁 651
  1. scafqwvqf

    1. 👍 0
    2. 👎 0

Respond to this Question

First Name

Your Response

Similar Questions

  1. FINANCE

    Yield to call Six years ago, the Singleton Company issued 20-year bonds with a 14 percent annual coupon rate at their $1,000 par value. The bonds had a 9 percent call premium, with 5 years of call protection. Today, Singleton

  2. Accounting

    Below is budgeted production and sales information for Flushing Company for the month of December: Product XXX Product ZZZ Estimated beginning inventory 30,000 units 18,000 units Desired ending inventory 34,000 units 17,000 units

  3. financial accounting

    (5) Chapter 13 Problem The Torre Company has the following balances in stockholders equity on December 31st. Common Stock - $5.00 par, 60,000 issued $300,000 Additional paid in capital - common 600,000 Preferred stock - $100 par,

  4. Intermediate Accounting

    The 10% bonds payable of Klein Company had a net carrying amount of $570,000 on December 31, 2006. The bonds, which had a face value of $600,000, were issued at a discount to yield 12%. The amortization of the bond discount was

  1. math

    You are the financial planner for Johnson Controls. Assume last year’s profits were $760,000. The board of directors decided to forgo dividends to stockholders and retire high-interest outstanding bonds that were issued 5 years

  2. accounting

    Carlton company had assetsof $280,000 & liabilities of $120,000 at the beginning of the year and assets of $400,000 & liabilities of $140,000 at the end of the year. During the year, the owner invested an additional $40,000 in the

  3. Accounting

    Magic Mountain retires its 8% bonds for $126,000 before their scheduled maturity. At the time, the bonds have a face value of 124,000 and a carrying value of $116,000. Record the early retirement of the bonds. (If no entry is

  4. Accounting

    1. The price of a bond is equal to the sum of the interest payments and the face amount of the bonds. 1. True 2. False 2. When a corporation issues bonds, it executes a contract with the bondholders, known as a bond debenture. 1.

  1. Accounting

    1. Bonds Payable has a balance of $900,000 and Premium on Bonds Payable has a balance of $10,000. If the issuing corporation redeems the bonds at 103, what is the amount of gain or loss on redemption? 1. $1,200 gain 2. $17,000

  2. healthcare fiancare

    HINT: 6% X $1,000,000 – {20% X ($1,000,000 – (6% X $1,000,000))} = 6% X $1,000,000 – {20% X ($1,000,000 - $60,000))}= 6% X $1,000,000 - {20% X $940,000}= 6% X $1,000,000 - $188,000 = $60,000 - $ 188,000= -$128,000 A) The

  3. finance

    he bonds issued by Stainless Tubs bear a 6 percent coupon, payable semiannually. The bonds mature in 11 years and have a $1,000 face value. Currently, the bonds sell for $989. What is the yield to maturity?

  4. Finance

    Wachowicz Corporation issued 15-year, noncallable, 7.5% annual coupon bonds at their par value of $1,000 one year ago. Today, the market interest rate on these bonds is 5.5%. What is the current price of the bonds, given that they

You can view more similar questions or ask a new question.