Purchase Solution

Calculating the issue price for the bonds

Not what you're looking for?

Ask Custom Question

On January 1st, Cub Company issued 8% stated rate bonds with a face amount of $100 million. The term of the bonds is 20 years and semiannual interest payments are due on June 30th and December 31st. The market rate of interest for similar bond issues was 9%. Calculate the issue price for the bonds.

Purchase this Solution
Solution Summary

Solution describes the steps to calculate the issue price for the bonds in the given case.

Solution Preview

Coupon amount=C=1000*8%/2=$40
Number of coupon ...

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
Recent Feedback
  • "Thank you"
  • "Really great step by step solution"
  • "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
  • "Thanks Again! This is totally a great service!"
  • "Thank you so much for your help!"
Purchase this Solution
Free BrainMass Quizzes
MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Learning Lean

This quiz will help you understand the basic concepts of Lean.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

View More Free Quizzes
Related BrainMass Solutions

  • Zero coupon bonds: Calculate issue price and interest expense for The Ledge

    81934 Calculating issue price and interest expense Zero coupon bonds pay no interest. The only cash investors receive is the lump-sum principle payment at maturity.

  • Whitefeather Industries Bond Pricing Record Issuance Calculation

    The market rate on January 1 was 10%. Required: 1. Calculate the issue price of the bonds and record the issuance of the bonds on January 1 2008. 2.

  • Convertible Bonds and Calculating Flotation Costs

    If the bonds are noncallable, what is the price of the bonds today? b. If the bonds are callable one year from today at $1,450, will their price be greater than or less than the price you computed in (a)? Why? Ch 22: 10.

  • Calculating the price of bonds in various market interest rates

    317604 Calculating the price of bonds in various market interest rates 3) Assume that General Motors Corporation sold an issue of bonds with a 10-year maturity, a $1000 par value, a 10% coupon rate, and semiannual interest payments. a.

  • Current yield and yield to maturity concepts

    The bonds will be repaid in 10 years. The company plans to issue the bonds at par value and pay interest semiannually. Given this, which of the following statements are correct? (I.) The initial selling price of each bond will be $1,000. (II.)

  • Implied Value of the Warrants Attached Bonds

    The solution contains an explanation of the process and reasons as well as the formula and computation for calculating the attached warrants.

  • Implied value of warrant

       $18.78 First find the value of the straight bond Calculating Value of a bond To calculate the price of the bond we need to calculate / read from tables the values of PVIF= Present

  • Convertible Bonds

    332889 MD Clock Company Bond Calculations: straight value, conversion value, selling price 1. MD Clock Company has an outstanding issue of convertible bonds with a $1,000 par value. These bonds are convertible into 50 shares of common stock.

  • Total real return

    183593 Calculating total real return on the investment in bonds. Calculating Investment Return You bought one of Bergen Manufacturing Co.'s 8% coupon bonds one year ago for $1,028.50. These bonds make annual payments and mature six years from now.

  • Zero-coupon bonds

    23240 Bond pricing, maturity and yield maturity for zero-coupon bonds I need help in figuring out the attached finance problem: Bond Pricing: Fill in the table below for the following zero-coupon bonds.

View More Related Solutions