Calculating the Fair Value of Debt
The Longo Corporation issued $60 million maturity value innotes, carrying a coupon rate of six percent, with interest paidsemiannually. At the time of the note issue, equivalent risk-rateddebt instruments carried yield rates of eight percent.
The notes matured in five years.
Calculate the proceeds that Longo Corporation will receive from thesale of the notes.
Round your answer to the nearest dollar.
$Answer
How will the notes be disclosed on Longo’s balance sheetimmediately following the sale?
Round your answers to the nearest dollar.
| Notes payable | $Answer |
| Less discount (enter asnegative) | $Answer |
| Notes payable (net) | $Answer |
Calculate the interest expense for Longo Corporation for the firstyear that the notes are outstanding.
Do not round until final answer. Round answers to the nearestdollar.
| First six months | $Answer |
| Second six months | $Answer |
Calculate the balance sheet value of the notes at the end of thefirst year.
Do not round until final answer. Round answer to the nearestdollar.
$Answer
