[vodrldnr]

On 7/1/10 E Corp issued 600 of its 10% $1000 bonds at 99 plus accrued interest. The bonds are dated 4/1/10 and mature 4/1/20. Interest is payable semiannually on 4/1 and 10/1. What amount did Eagle receive from the bond issuance?

answer 609000

it has been several months and still keep making me confused.

to solve this problem, I just assumed that interest is annual %. I do this almost every bond problem. but on the question itself, I do not find any clue to assume the interest is annual %. I just need to assume that it is annual % since the interest is payable semiannually?

Hard to explain it in word… whoa .. .can someone really help me to understand this ?

in this problem we normally get the total interest revenue 60,000 ( 600*10%*$1000 bod ) * (12/12)

then my question is how do we know it is annual % (12/12) ? ;_____________________________________;;;;; hel me plz? I been posting this question for many times but still don’t get it …

It ain't About How Hard You Hit

[atx15]

To solve this problem, I did the following:

1. Find the carrying value of the bond: 600 x $1,000 x .99 = $594,000 (the .99 is the fact that the bond sold at a discount).

2. Find the accrued interest: $600,000 x 10% x 3/12 = $$15,000 (the 3/12 comes from the fact that the bond was sold between interest periods, so you have to accrue interest until the next interest period because on that date bondholders will receive the full amount of interest).

3. Add the carrying value of the bond and the accrued interest: $594,000 + $15,000 = $609,000

Hopefully this helps!

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