payment date

Examples of payment date in the following topics:

• Maturity Date

  • Maturity date refers to the final payment date of a loan or other financial instrument.
  • In finance, maturity date or redemption date, refers to the final payment date of a loan or other financial instrument, at which point the principal (and all remaining interest) is due to be paid.
  • The issuer has to repay the nominal amount on the maturity date.
  • As long as all due payments have been made, the issuer has no further obligations to the bond holders after the maturity date.
  • Similarly, the maturity date, if applicable, is the date as the bond is redeemed.

• Dividends Payable

  • Dividends are payments made by a corporation to its shareholders; the payment amount is reported as dividends payable on the balance sheet.
  • For the company, a dividend payment is not an expense, but the division of after tax profits among shareholders.
  • On the dividend declaration date, a company's board of directors announces its intention to pay a dividend to shareholders on record as of a certain date (date of record).
  • Dividends payable is recorded as a current liability on the company's books; the journal entry confirms that the dividend payment is now owed to the stockholders.
  • On the declaration date, the Board announces the date of record and a payment date; the payment date is the date when the funds are sent to the shareholders and the dividends payable account is reduced for the payment amount.

• Bonds Payable and Interest Expense

  • The bonds are dated 2010 December 31, call for semiannual interest payments on June 30 and December 31, and mature on 2020 December 31.
  • Valley made the required interest and principal payments when due.
  • To record periodic interest payment.
  • Note that Valley does not need adjusting entries because the interest payment date falls on the last day of the accounting period.
  • For example, assume the Valley bonds were dated 2010 October 31, issued on that same date, and pay interest each April 30 and October 31.

• Defining Dividends

  • Dividends may be allocated in different forms of payment, outlined below:Cash dividends are the most common.
  • The board will also announce a date of record and a payment date.
  • After this date the stock becomes ex-dividend.
  • Record date refers to the date that shareholders must be registered on record in order to receive the dividend.
  • Payment date is the day when the dividends will actually be distributed to the shareholders of a company or credited to brokerage accounts.

• Impact of Payment Frequency on Bond Prices

  • Payment frequency can be annual, semi annual, quarterly, or monthly; the more frequently a bond makes coupon payments, the higher the bond price.
  • The payment schedule of financial instruments defines the dates at which payments are made by one party to another on, for example, a bond or a derivative.
  • F = face value, iF = contractual interest rate, C = F * iF = coupon payment (periodic interest payment), N = number of payments, i = market interest rate, or required yield, or observed / appropriate yield to maturity, M = value at maturity, usually equals face value, P = market price of bond.
  • However, the present values of annuities of coupon payments vary among payment frequencies.
  • The present value of an annuity is the value of a stream of payments, discounted by the interest rate to account for the payments are being made at various moments in the future.

• Coupon Interest Rate

  • On the due dates, the bondholder would hand in the coupon to a bank in exchange for the interest payment.
  • Such bonds make only one payment–the payment of the face value on the maturity date.
  • Normally, to compensate the bondholder for the time value of money, the price of a zero-coupon bond will always be less than its face value on any date before the maturity date.
  • The bondholder receives the full principal amount on the redemption date.
  • A coupon payment on a bond is a periodic interest payment that the bond holder receives during the time between when the bond is issued and when it matures.

• The Relationship Between Present and Future Value

  • On the other hand, the present value (PV) is the value on a given date of a payment or series of payments made at other times.
  • The formula implicitly assumes that there is only a single payment.
  • If there are multiple payments, the PV is the sum of the present values of each payment and the FV is the sum of the future values of each payment.

• Terms of Trade

  • An example of a common payment term is Net 30, which means that payment is due at the end of 30 days from the date the invoice is issued.
  • Other common payment terms include Net 45, Net 60 and 30 days end of month.
  • Net 60 is less used because of its longer payment terms.
  • The debtor is free to pay before the due date, and some businesses offer a discount for early payment.
  • The operator may sign a franchising agreement, under which the distributor agrees to provide ice cream stock under the terms "Net 60" with a ten percent discount on payment within 30 days, and a 20% discount on payment within 10 days.

• Calculating Perpetuities

  • Essentially, they are ordinary annuities, but have no end date.
  • Since there is no end date, the annuity formulas we have explored don't apply here.
  • There is no end date, so there is no future value formula.
  • The PV is simply the payment size (A) divided by the interest rate (r).
  • The rate at which the payments change is fittingly called the growth rate (g).

• Calculating Annuities

  • Ordinary annuities: payments occur at the end of the period ( and )
  • Annuities-due: payments occur at the beginning of the period ( and )
  • Perpetuities: payments continue forever .
  • Perpetuities don't have a FV because they don't have an end date.
  • It is just a matter of when the first and last payments occur (or the size of the payments for perpetuities).