Explore BrainMass
Share

Bond calculations: discount, premium, amortization, cash-flow

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

The initial proceeds per bond, the size of the issue, the initial maturity of the bond, and the years remaining to maturity are shown in the following table for a number of bonds. In each case, the firm is in the 40 percent tax bracket, and the bond has a $1,000 par value.

Bond Proceeds per bond Size of issue Initial maturity of bond Years remaining to maturity
A $ 985 10,000 Bonds 20 years 15 years
B 1,0325 20,000 25 16
C 1,000 22,500 12 9
D 960 5,000 25 15
E 1,035 10,000 30 16

a. Indicate whether each bond was sold at a discount, at a premium, or at its par value.

b. Determine the total discount or premium for each issue.

c. Determine the annual amount of discount or premium amortized for each bond.

d. Calculate the unamortized discount or premium for each bond.

e. Determine the after-tax cash flow from the unamortized discount associated with the retirement now of each of these bonds, using the values developed in part (d).

© BrainMass Inc. brainmass.com October 25, 2018, 12:31 am ad1c9bdddf
https://brainmass.com/business/discounted-cash-flows-model/bond-calculations-discount-premium-amortization-after-tax-cash-flow-230985

Solution Summary

This solution provides calculations for various questions involving bonds in Excel.

$2.19
See Also This Related BrainMass Solution

Accounting: Ratio, depreciation, Cash flow statement etc.

PLEASE SHOW A DESCRIPTION ON HOW TO DO ALL OF THESE:

Prepare a schedule of cash payments for
partnership liquidation

Prepare journal entries for bond issuance and first interest payment with amortization of discount/premium

Prepare operating section of Statement of Cash Flows using indirect method

Prepare journal entries for transactions under equity method of accounting

Prepare Income Statement including intra-period tax allocation for
irregular items

PLEASE HELP ME UNDERSTAND THESE:
Ch 10 Depreciation terminology
Ch 10 Calculate Depreciation
Ch 11 Calculate interest expense on note
Ch 11 Payroll taxes versus employee withholdings
Ch 12 Advantages/disadvantages of partnerships
Ch 12 Steps in partnership liquidation
Ch 13 Issue stock to acquire non-cash asset
Ch 13 Stock terminology
Ch 14 Journal entry for stock dividend
Ch 14 Calculate Earnings Per Share (EPS)
Ch 15 Bond terminology
Ch 15 Bond terminology
Ch 15 Bond prices versus interest rates
Ch 16 Valuation of short term investments
Ch 16 Methods of accounting for stock investments
Ch 17 Meaning of statement of Cash Flows activities
Ch 17 Classify items into activities
Ch 17 Calculate cash received from customers
Ch 18 Ratio
Ch 18 Extraordinary item

View Full Posting Details