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The following is the balance sheet for XYZ Corporation's as at
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  • The following is the balance sheet for XYZ Corporation?s as at December 31, 2015.

Long-term debt (bonds, at par)     

$10,000,000

Preferred stock                                     

2,000,000

Common stock ($10 par)                     

4,000,000

Total Liabilities and Equity

$16,000,000

The bonds have a 4 percent coupon rate, payable semiannually, and a par value of $1,000. They mature in 10 years? time. The yield to maturity is 12 percent, so the bonds now sell below par. Determine the current market value of the firm?s debt.



Match the following sentences to the most correct concept.

The process of accumulating interest in an investment over time to earn more interest is termed ______________. The present value of a future cash flow to determine its value today is known as the ________________________. The amount an investment is worth after one or more time periods is referred to as __________. Interest earned on the principal and may be for a number of years may be called ________________.






Interest

 

Principal 20 11.46992 229.398424371

 

1000 0.311805 311.804726886

 

Price

 

$

 

541.20 Market value of debt $ 5,412,031.51

 







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