Grant Co. issued $500,000 face value, five-year, 8% bonds on December 31, Year 1. The bonds pay interest annually starting from December 31, Year 2. The bonds were sold to yield 7%. Present value factors are as follows: 7% 8% Present value of $1, five periods 0.712986 0.680583 Present value of ordinary annuity of $1, five periods 4.100197 3.992710 Present value of annuity due of $1, five periods 4.387211 4.312127 What amount of long-term liability should Grant report on December 31, Year 1, for this sale

Question

22-03-2022
Business

contestada

Grant Co. issued $500,000 face value, five-year, 8% bonds on December 31, Year 1. The bonds pay interest annually starting from December 31, Year 2. The bonds were sold to yield 7%. Present value factors are as follows: 7% 8% Present value of $1, five periods 0.712986 0.680583 Present value of ordinary annuity of $1, five periods 4.100197 3.992710 Present value of annuity due of $1, five periods 4.387211 4.312127 What amount of long-term liability should Grant report on December 31, Year 1, for this sale

Respuesta :

Otras preguntas

Which of the following statements about the market philosophy of the Chicago School of Economics is correct?

Which point under the heading Education supports the idea that education meant more to Dr. Martin Luther King, Jr., than just academics? A. He attended public

Describe a process in the human body in which there is evidence of the cell cycle at work.

57 is 6 percent of what number?

What is the best answer choice

An astronomical unit is _____. the mass of the Sun 10 light-years the distance from Earth to the Sun the diameter of the earth According to Newton's 3rd law of

Savannah ga reciveives 48 inches of rain per year, on average. wich equation describes the relationship between t , the number of years and r, the rotal rainfal

A term psychologists use to describe your opinion of yourself is called _____. self-actualization self-esteem self-pity self-respect

PLEASE HELP Geometry

A piecewise function is represented by the graph below. What is the domain for the piece of the function represented by f(x) = x + 1? x < –1 –1 ≤ x ≤ 1 1 ≤

Parrain Parrain · Answer 1 · 2022-03-23T11:17:55+01:00

Based on the face value of the bond and the associated interest, the amount of long term liability that Grant should record is $520,500.88.

What is the long term liability?

The long term liability in year 1 should be the present value of the bond. This can be found as:

= Present value of coupon payment + Present value of bond face value

The coupon payment is:

= 8% x 500,000

= $40,000

This is an annuity because it is constant so the revised formula is:
= (Coupon x Present value interest factor of annuity, 7%, 5 years) + (Face value x Present value factor, 7%, 8 years)

Solving therefore gives:

= (40,000 x 4.100197) + (500,000 x 0.712986)

= $520,500.88

Find out more on bond pricing at https://brainly.com/question/25596583.