Auerbach Inc. issued 8% bonds on October 1, 2016. The bonds have a maturity date
ID: 2417080 • Letter: A
Question
Auerbach Inc. issued 8% bonds on October 1, 2016. The bonds have a maturity date of September 30, 2026 and a face value of $380 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2017. The effective interest rate established by the market was 6%.
Assuming that Auerbach issued the bonds for $332,644,000, what would the company report for its net bond liability balance after its first interest payment on March 31, 2017, rounded up to the nearest thousand?
$316,011,000.
$349,276,000.
$334,076,200.
$317,444,030.
Auerbach Inc. issued 8% bonds on October 1, 2016. The bonds have a maturity date of September 30, 2026 and a face value of $380 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2017. The effective interest rate established by the market was 6%.
Explanation / Answer
Bond issued on = 10/1/2016 Maturity Date = 9/30/2026 Face Value = 380 Milion $ Issue Price = $332,644,000 Interest Liability as on March 31,2017 15199970 (for the six month) Net Bond liability = 317444030
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