bond of £6,000 nominal is redeemable at 109% on any coupon payment date between 11 and 23 years from the date of isssue. The bond pays coupons of 8.2% per annum quarterly in arrears. Calculate, to 2 decimal places, the with-dividend price one month after issue that should be paid by an investor liable to 23% income tax wishing to achieve an effective annual yield of 2.7%. correct answer = 8497.65 (no tables, only formulas

bond of £6,000 nominal is redeemable at 109% on any coupon payment date between 11 and 23 years from the date of isssue. The bond pays coupons of 8.2% per annum quarterly in arrears. Calculate, to 2 decimal places, the with-dividend price one month after issue that should be paid by an investor liable to 23% income tax wishing to achieve an effective annual yield of 2.7%. correct answer = 8497.65 (no tables, only formulas

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 3EA: Krystian Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the...

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Krystian Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the market rate was 6%. Interest was paid semi-annually. Calculate and explain the timing of the cash flows the purchaser of the bonds (the investor) will receive throughout the bond term. Would an investor be willing to pay more or less than face value for this bond?
Assume that a company issues a new bond with coupon rate of 11 %, 5% yield and $100 par value bond. Coupon is paid annually. The bond has three years to maturity. (1) What is the Macaulay duration of this bond? (ii) How would you interpret the result obtained in part (e)(i) above?
A corporate bond has a face value of $1 000, a coupon rate of interest of 10.5% per annum, payable semi-annually, and 20 years remaining to maturity. The market interest rate for bonds of similar risk and maturity is currently 8.5% per annum.Required:i. What is the coupon payment of the bond? ii. What is the present value of the bond? iii. If the coupon payment is payable annual (based on the same information), what is the value of the bond?
An investor purchases a bond 6 months after the issue. The bond will be redeemed at 105% eight years after issue and pays coupons of 4% per annum annually in arrears. The investor pays a tax of 25% on income and 15% on capital gains. a. Calculate the bond's purchase price per $100 nominal to provide the investor with a rate of return of 5% per annum effective. b. If the real rate of return expected by the investor from the bond is 2% per annum effective, then calculate the annual rate of inflation expected by the investor
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A fixed interest stock is redeemable at 110% at the option of the borrower at any time between 9 years and 22 years from the date of issue. The coupon rate is 4.8% per annum payable quarterly in arrears. What ex-dividend price should be paid 2 months after issue per £500,000 nominal by an investor subject to both income tax and capital gains tax at rates of 25% and of 37%, respectively, wishing to achieve a net annual yield of 10.2%? Express, to 2 decimal places, the price that should be paid by the investor.
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