From page 9-3 of the VLN, what are the cash flows from a bond that must be present valued back to today? Group of answer choices A. The face amount only B. The interest payments only C. The issue...

From page 9-3 of the VLN, what are the cash flows from a bond that must be present valued back to today? Group of answer choices A. The face amount only B. The interest payments only C. The issue price only D. The face amount and interest payments

Extracted text: Bonds can be issued (sold) for more or less than their face value. Sells at Face Amount (100%): Bond Premium (>100%): Bond Discount (<100%): determining="" the="" issue="" price="" of="" a="" bond="" 1.="" identify="" the="" two="" cash="" flows="" provided="" by="" the="" bond="" (face="" value-a="" single="" sum="" and="" interest="" payments="" [face="" x="" stated="" rate="" or="" if="" semiannual="" then="" face="" x="" %="" stated="" rate]-an="" annuity).="" 2.="" compare="" the="" market="" rate="" with="" the="" stated="" rate="" to="" determine="" if="" bond="" will="" sell="" at="" face,="" premium="" or="" discount.="" if="" at="" face="" then="" no="" more="" calculations="" are="" needed.="" 3.="" eliminate="" the="" stated="" rate,="" you="" don't="" need="" it="" anymore="" as="" you="" already="" know="" the="" cash="" flows="" from="" the="" bond.="" 4.="" use="" the="" market="" rate="" and="" compounding="" periods="" to="" determine="" the="" correct="" factor="" to="" present="" value="" the="" cash="" flows.="" practice="" abc="" corporation="" wants="" to="" issue="" five-year="" $1,000="" bonds="" 10%="" stated="" rate="" paying="" semi-annual="" interest.="" market="" rate="" of="" interest="" is="" 8%;="" (therefore,="" semiannual="" would="" be="" 5%="" stated="" rate="" and="" 4%="" market="" rate="" respectively).="" what="" is="" the="" bond="" issue="" price="" on="" january="" 1,="" 20xa?="" calculate="" the="" issue="" price="" of="" the="" bond:="" cash="" flow="" x="" pv="" factor="" (use="" market="" rate)="Present" value="" present="" value="" of="" principal="" (face)="" present="" value="" of="" interest="" payment="" (face="" x="" stated)="" issue="" price="" (sales="" price)="" or="" with="" the="" ti="" baii="" plus="" calculator="" pmt="" срт="" pv="" iy="" fv="" the="" issue="" price:="" calculate="" the="" difference:="" bond="" issue="" price="" bond="" face="" amount="" difference="" record="" the="" bond="" issuance="" on="" january="" 1,="">


Extracted text: Leases A lease provides the lessee (user) the right to use an asset for a specified period of time. BONDS What are Bonds and why do corporations issue them? TERMS (pay close attention to terminology): Face value (aka bond payable, bond principal, or maturity value) is the contract amount and is a future cash flow the company will pay at maturity. Bond Liability (aka bond carrying amount) the liability on the balance sheet related to the bond and is made up of bond payable + bond premium or bond payable-bond discount. Stated rate (aka contract rate) the rate promised by the issuer. It is the rate used to calculate the interest paymént. (Bond payable x stated rate = annual interest payment, a cash flow) ABC Corporation $1,000 10% interest Interest payable June 30 and December 31 Matures December 31, 20XE 5 year bond +Following are the cash flows provided by the above bond ($1,000 face, 10% semi-annual interest) $1000 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 1 4 8. 9. 10 Market rate (aka, effective interest rate) the true interest rate yielded by the bond 1. The market rate is used to calculate the bond issue price; and it is used to calculate bond interest expense (bond liability x market rate annual interest expense). 2. Parts B & C: BOND PRICING and RECORDING We will use the present value concepts to determine the issue price of the bonds (Present value tables from Module 8 in Canvas; or use your TI BAII Plus Financial Calculator).