White & Decker Corporation's 2024 financial statements included the following information in the long-term debt disclosurenote:($ in millions)Zero-coupon subordinated debentures, due 2039:2024$ 401The disclosure note stated the debenture bonds were issued late in 2019 and have a maturity value of $590 million. Thematurity value indicates the amount that White & Decker will pay bondholders in 2039. Each individual bond has a maturityvalue (face amount) of $1,090. Zero-coupon bonds pay no cash interest during the term to maturity. The company is"accreting" (gradually increasing) the issue price to maturity value using the bonds' effective interest rate computed on anannual basis.Required:1. Determine the effective interest rate on the bonds.2. Determine the issue price in late 2019 of a single, $1,090 maturity-value bond.Note: For all requirements, round your answers in millions to 2 decimal places. For example, $555.55 million should beentered as 555.55. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)1. Effective interest rate2. Issue price%million

Step 1:1)Face value = $590 millionTerm = 20 yearsCarrying value = $401 million in 2024 (15 years to…

Answered: White & Decker Corporation's 2024…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 3P

See similar textbooks

Similar questions

Chung Inc. issued $50,000 of 3-year bonds on January 1, 2018, with a stated rate of 4% and a market rate of 4%. The bonds paid interest semi-annually on June 30 and Dec. 31. How much money did the company receive when the bonds were issued? The bonds would be quoted at what rate?
Bats Corporation issued 800,000 of 12% face value bonds for 851,705.70. The bonds were dated and issued on April 1, 2019, are due March 31, 2023, and pay interest semiannually on September 30 and March 31. Bats sold the bonds to yield 10%. Required: 1. Prepare a bond interest expense and premium amortization schedule using the straight-line method. 2. Prepare a bond interest expense and premium amortization schedule using the effective interest method. 3. Prepare any adjusting entries for the end of the fiscal year, December 31, 2019, using the: a. straight-line method of amortization b. effective interest method of amortization 4. Assume the company retires the bonds on June 30, 2020, at 103 plus accrued interest. Prepare the journal entries to record the bond retirement using the: a. straight-line method of amortization b. effective interest method of amortization
Help Save White & Decker Corporation's 2019 financial statements included the following information in the long-term debt disclosure note: ($ in millions) 2019 Zero-coupon subordinated debentures, due 2033: $360 The disclosure note stated the debenture bonds were issued late in 2013 and have a maturity value of $610 million. The maturity value indicates the amount that White & Decker will pay bondholders in 2033. Each individual bond has a maturity value (face amount) of $1,110. Zero-coupon bonds pay no cash interest during the term to maturity. The company is "accreting" (gradually increasing) the issue price to maturity value using the bonds' effective interest rate computed on an annual basis. (FV of $1, PV of $1, EVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the effective interest rate on the bonds. 2. Determine the issue price in late 2013 of a single, $1,110 maturity-value bond. (For all requirements,…
On June 30, 2024, Single Computers issued 8% stated rate bonds with a face amount of $100 million. The bonds mature on June 30, 2039 (15 years). The market rate of interest for similar bond issues was 5% (2.5% semiannual rate). Interest is paid semiannually (4.0%) on June 30 and December 31, beginning on December 31, 2024. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. Determine the price of the bonds on June 30, 2024. 2. Calculate the interest expense Single reports in 2024 for these bonds using the effective interest method. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the price of the bonds on June 30, 2024. Note: Round percentage answers to one decimal place. Round your final answers to nearest whole dollar amount, not in millions. Table values are based on: Cash Flow Interest Principal Price of bonds n = i= Required 1 Period-End Amount On…
On June 30, 2024, Single Computers issued 5% stated rate bonds with a face amount of $280 million. The bonds mature on June 30, 2039 (15 years). The market rate of interest for similar bond issues was 4% (2.0% semiannual rate). Interest is paid semiannually (2.5%) on June 30 and December 31, beginning on December 31, 2024. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. Determine the price of the bonds on June 30, 2024 2. Calculate the interest expense Single reports in 2024 for these bonds using the effective interest method. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the price of the bonds on June 30, 2024. Note: Round percentage answers to one decimal place. Round your final answers to nearest whole dollar amount, not in millions. Table values are based on: n = i = Cash Flow Interest Principal Price of bonds Amount Present Value
On June 30, 2021, Singleton Computers issued 6% stated rate bonds with a face amount of $200 million. The bonds mature on June 30, 2036 (15 years). The market rate of interest for similar bond issues was 5% (2.5% semiannualrate). Interest is paid semiannually (3%) on June 30 and December 31, beginning on December 31, 2021.Required:1. Determine the price of the bonds on June 30, 2021.2. Calculate the interest expense Singleton reports in 2021 for these bonds.
Auerbach Inc. issued 4% bonds on October 1, 2021. The bonds have a maturity date of September 30, 2031 and a face value of $425 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2022. The effective interest rate established by the market was 6%.Assuming that Auerbach issued the bonds for $361,772,495, what interest expense would it recognize in its 2021 income statement?
On September 30, 2024, the Techno Corporation issued 8% stated rate bonds with a face amount of $460 million. The bonds mature on September 30, 2044 (20 years). The market rate of interest for similar bonds was 10%. Interest is paid semiannually on March 31 and September 30. Required: Determine the price of the bonds on September 30, 2024. Note: Use tables, Excel, or a financial calculator. Round your final answers to nearest whole dollar amount, not in millions. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Time values are based on: n = i= Cash Flow Interest Principal Price of bonds Amount Present Value
On June 30, 2018, Singleton Computers issued 6% stated rate bonds with a face amount of $200 million. The bonds mature on June 30, 2033 (15 years). The market rate of interest for similar bond issues was 5% (2.5% semiannual rate). Interest is paid semiannually (3%) on June 30 and December 31, beginning on December 31, 2018. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price of the bonds on June 30, 2018. 2. Calculate the interest expense Singleton reports in 2018 for these bonds using the effective interest method. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the price of the bonds on June 30, 2018. (Enter your answers in whole dollars. Round percentage ans decimal place. Round your final answers to nearest whole dollar amount.) Table values are based on: n = i = Cash Flow Amount Present Value Interest Principal Price of bonds
The balance sheet at December 31, 2024, for Nevada Harvester Corporation includes the liabilities listed below: a. 7% bonds with a face amount of $46 million were issued for $46 million on October 31, 2015. The bonds mature on October 31, 2035. Bondholders have the option of calling (demanding payment on) the bonds on October 31, 2025, at a redemption price of $46 million. Market conditions are such that the call is not expected to be exercised. b. Management intended to refinance $6.6 million of its 14% notes that mature in May 2025. In early March, prior to the actual issuance of the 2024 financial statements, Nevada Harvester negotiated a line of credit with a commercial bank for up to $4.6 million any time during 2025. Any borrowings will mature two years from the date of borrowing. c. Noncallable 6% bonds with a face amount of $14.5 million were issued for $14.5 million on September 30, 2005. The bonds mature on September 30, 2025. Sufficient cash is expected to be available to…
Metlock Ltd. issued a $791,000, 10-year bond dated January 1, 2023. The bond was sold to yield 12% effective interest. The bond paid 10% interest on January 1 and July 1 each year. The company's year-end was December 31, and Metlock followed IFRS. Using 1. factor Tables 2. a financial calculator, or 3. Excel function PV, calculate the amount received for the bond, and any discount or premium on the bond. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ORDINARY ANNUITY OF 1. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places e.g. 58,971.) Proceeds from sale of bond Discount on bond Prepare the journal entries for above transactions. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the…
The Long-Term Debt section of Chesapeake's Balance Sheet at December 31, 2022 showed the following: Bonds Payable (7.5%, interest payable 6/30 and 12/31, $1,000,000 due 12/31/2031) Less: Unamortized Bond Discount Carrying Value The journal entry to record the interest payment on June 30, 2023, assuming a market interest rate of 9% would include: a Credit to Discount on Bonds Payable of $3,900 a Credit to Premium on Bonds Payable of $3,900 a Debit to Cash $41,400 (80,000) $920,000 a Credit to Interest Expense of $41,400 a Debit to Interest Expense of $37,500

SEE MORE QUESTIONS

Recommended textbooks for you

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Intermediate Accounting: Reporting And Analysis

Accounting

ISBN:

9781337788281

Author:

James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:

Cengage Learning

Cornerstones of Financial Accounting

Accounting

ISBN:

9781337690881

Author:

Jay Rich, Jeff Jones

Publisher:

Cengage Learning

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Intermediate Accounting: Reporting And Analysis

Accounting

ISBN:

9781337788281

Author:

James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:

Cengage Learning

Cornerstones of Financial Accounting

Accounting

ISBN:

9781337690881

Author:

Jay Rich, Jeff Jones

Publisher:

Cengage Learning

Principles of Accounting Volume 1

Accounting

ISBN:

9781947172685

Author:

OpenStax

Publisher:

OpenStax College

SEE MORE TEXTBOOKS