Question

Quaker Company announces a bond issue of $50400 to be issued at 5% [which at par] It is a ten year issue with interest paid semi- annually and principal due on the maturity date. The issue date is to be July 1st. However the bonds are actually not sold until September 1st Quaker Company prepares its annual financial statements on October 31st.

What is the amount of cash received by Quaker company on September 1st ?

Answer 1

Calculate the amount of cash received by Quaker Company on September 1st, use the bond formula. The formula is: Cash received = Face value of the bond * (1 + Interest rate/2)^(Number of semi-annual periods)

Step-by-step explanation:

The amount of cash received by Quaker Company on September 1st can be calculated using the bond formula. The formula is: Cash received = Face value of the bond * (1 + Interest rate/2)^(Number of semi-annual periods)

First, calculate the number of semi-annual periods. The bond is a ten-year issue with interest paid semiannually, so there are 20 semi-annual periods.

Next, substitute the values in the formula: Cash received = $50400 * (1 + 0.05/2)^(20)

Solve this equation to find the amount of cash received by Quaker Company on September 1st.