On January 1, 20x2, Hoffman Company issued bonds with a face amount of $800,000 and a contractinterest at the rate of 10%. The current market rate of interest is 12%. What is the issue (selling) price ofthese bonds?

To calculate the issue (selling) price of the bonds, we can use the present value formula. The…

Answered: interest at the rate of 10%. The…

interest at the rate of 10%. The current market rate of interest is 12%. What is the issue (selling) price of these bonds?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 9EB: Roo Incorporated issued 50 bonds with a face value of $1,000 and a stated rate of 6% when the market...

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Concept explainers

Debenture Valuation

A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.

Note Valuation

It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:

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On January 1, 20x2, Hoffman Company issued bonds with a face amount of $800,000 and a contract
interest at the rate of 10%. The current market rate of interest is 12%. What is the issue (selling) price of
these bonds?

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