FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- 48 The Sunland Products Co. currently has debt with a market value of $300 million outstanding. The debt consists of 9 percent coupon bonds (semiannual coupon payments) which have a maturity of 15 years and are currently priced at $1,434.63 per bond. The firm also has an issue of 2 million preferred shares outstanding with a market price of $10 per share. The preferred shares pay an annual dividend of $1.20. Sunland also has 14 million shares of common stock outstanding with a price of $20.00 per share. The firm is expected to pay a $2.20 common dividend one year from today, and that dividend is expected to increase by 5 percent per year forever. If Sunland is subject to a 40 percent marginal tax rate, then what is the firm's weighted average cost of capital? Excel Template (Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen…arrow_forwardPresented below is information taken from a bond investment amortization schedule with related fair values provided. These bonds are classified as available-for-sale. 12/31/20 12/31/21 12/31/22 Amortized cost $410,900 $445,100 $546,300 Fair value $416,800 $434,600 $546,300 (a) Indicate whether the bonds were purchased at a discount or at a premium. Prepare the adjusting entry to record the bonds at fair value at December 31, 2020. The Fair Value Adjustment account has a debit balance of $1,100 prior to adjustment. (c) Prepare the adjusting entry to record the bonds at fair value at December 31, 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)arrow_forwardAll of the securities below have annual payments. [Do not round interim calculations] Years Coupon Market Maturity Security Rating Treasury Treasury Treasury Treasury Treasury Corp A Corp B Corp C A 88 AA 1 3 5 10 15 5 10 Multiple Choice Multiple Choice $109.40 $89.50 $76.00 Face Value $ 1,000 $ 1,000 $ 1,000 $70.00 $1,000 $ 1,000 $ 1,000 $1,000 $ 1.000 Rate 0.00% 1.90% 4.30% 6.80% 6.60% 8.10% 7.90% 7.00% Price $ S $ $ $ $ $ You are advising the CEO and CFO of an IU Ventures portfolio company in the issuance of new bonds. The company has been rated as BB and wants to issue 3-year bonds and receive full face value. Assuming the bonds are trading at equilibrium, how much should each annual coupon payment be for the new bonds? S 965.00 939.06 932.42 100712 908.25 990.00 859.88 860.00 There is not enough information provided to answer this question.arrow_forward
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