1) Marigold Corp

Finance Dec 04, 2020

1) Marigold Corp. issues $220,000, 10-year, 5% bonds at 96.

Prepare the journal entry to record the sale of these bonds on March 1, 2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

2) What is the YTM of a Sprint Bond that has a 7.2% coupon, 20 years to maturity, is priced at $1025 and pays annually?

Expert Solution

1) Please see the attachment.

Computation of YTM using Rate Function in Excel:

=rate(nper,pmt,-pv,fv)

Here,

Rate = YTM = ?

Nper = 20 years

PMT = $1,000*7.2% = $72

PV = $1,025

FV = $1,000

Substituting the values in formula:

=rate(20,72,-1025,1000)

Rate or YTM = 6.96%

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