Present value of bonds payable; premium Moss Co. issued $200,000 of four-year, 12% bonds, with interest payable semiannually, at a market (effective) interest rate of 11%. Determine the present value of the bonds payable using the present value tables in Exhibit 5 and Exhibit 7. Round to the nearest dollar.
Q: Calvert Corporation expects an EBIT of $25,700 every year forever. The company currently has no…
A: Given information,EBIT = $25,700Cost of Equity = 15.5%Borrow rate = 10.3%Tax rate =22%
Q: Related to Checkpoint 6.6) (Present value of annuities and complex cash flows) You are given three…
A: Discounting technique is applied to find out equivalent present value of future cash flows.
Q: Compute the NPV statistic for Project U if the appropriate cost of capital is 9 percent. (Negative…
A: NPV or net present value is the sum of present values of all cash flows from a project.NPV is an…
Q: ancial planner offers you two different investment plans. Plan X is an annual perpetuity of $12,000…
A: Perpetuity is annuity where there are payments forever and payment continue forever and other…
Q: At year-end 2016, total assets for Arrington Inc. were $1.4 million and accounts payable were…
A: Data given: Total assets at year end 2016 =$1400,000Sales in 2016=$2800,000Common stock in…
Q: Lourdes Corporation's 10% coupon rate, semiannual payment, $1,000 par value bonds, which mature in…
A: The total return that will be received from the time a bond is purchased until it matures is known…
Q: GQ recently reported (in millions) $8,250 of sales, $5,750 of operating costs other than…
A: Sales = $8,250Operating cost = $5,750Depreciation = $850Interest rate = 5%Tax rate = 25%Capital…
Q: You are evaluating a project for The Ultimate recreational tennis racket, guaranteed to correct that…
A: After tax salvage value at the terminal year of the project is calculated as shown below.
Q: 1-s-t- -s-i-t-u-a-t-i-o-n O-n-e- -o-f- -y-o-u-r- -f-r-i-e-n-d-s- -m-e-n-t-i-o-n-s- -t-h-a-t- -h-e-…
A: 2nd situation- In the given scenario, Lisa has a homeowner's insurance policy with P5,000,000…
Q: Last month, Kaitlin's average daily balance on her credit card was $1,363.16. The annual interest…
A: When people, organizations, or governments don't have instant access to enough money to cover…
Q: The city of Arlington is trying to determine the annual budget associated with a new after school…
A: Cost now = $ 1750000Cost after 8 years = $ 1750000Annual interest rate = 10.5%
Q: ani Corporation has 5 million shares of common stock outstanding. The current share price is $65,…
A: Weighted average cost of capital is the weighted average cost of after tax cost of debt and weighted…
Q: 5) Calculate Basel 3 compliance CAR: ASSETS Cash and gold Government treasury bonds Due from banks…
A: The Basel Committee on banking supervision (BCBS) was formed with the objective that the bank should…
Q: A project has an initial cost of $50,000, expected net cash inflows of $9,000 per year for 12 years,…
A: Data given:Initial investment=$50,000Cash inflows=$9000 per yearN=12 yearsCost of…
Q: Global Pistons (GP) has common stock with a market value of $380 million and debt with a value of…
A: Expected return of a stock is calculated by considering the weight of each asset class in the…
Q: wise mechanical engineering graduate began saving money for early retirement by depositing $1300 per…
A: Future Value refers to the compounded value of future cash flows at a specified interest rate.
Q: arrimon Industries bonds have 4 years left to maturity. Interest is paid annually, and the bonds…
A: Yield to Maturity (YTM) is the expected annual rate of return earned on a bond under the assumption…
Q: Operating cash flow (growing each year, MACRS). Mathews Mining Company is looking at a project that…
A: Operating cash flow is the net cash flow after deducting all costs and expenses from the revenue,…
Q: This problem is useful for testing the ability of financial calculators or excel. Consider the…
A: IRR stands for Internal Rate of Return, which is a financial metric used to calculate the potential…
Q: You have just made your first $4,500 contribution to your individual retirement account. Assume you…
A: Present Value = pv = $4500Rate of return = r = 10.85%
Q: The company has £5 million available for other investments in the current financial year. A summary…
A: Profitability Index is a capital budegting techniques which can help in decision making on the basis…
Q: Aberdeen Outboard Motors is contemplabing bulding a new plant. The company anticipates that the…
A: 1. Net present value is a capital budgeting technique used for making investment decisions.Net…
Q: Sisters Corporation expects to earn $7 per share next year. The firm’s ROE is 16% and its plowback…
A: Expected Earnings per share = $7ROE = 16%Plowback Ratio = 60%Market capitalization rate = 10%
Q: Lohn Corporation is expected to pay the following dividends over the next four years: $15, $11, $7,…
A: The value of stock is calculated using following equationWhere, D1, D2, D3 and D4 are the dividends…
Q: A property is expected to have net operating income during the first year of $50,000, which is…
A: For the calculation of the estimated value of the property present value of the Annual cash flow…
Q: 25. Two stocks, one high risk (Happy) and one low risk (Lonely), have been evaluated by your…
A: Est (R)BetaMarket261.00Happy0.331.20Lonely0.140.75The Risk-Free rate is 3%
Q: Last year National Aeronautics had a FA/Sales ratio of 40%, comprised of $250 million of sales and…
A: Here,Fixed Assets is $100 millionTotal Sales is $250 millionCurrent FA/Sales Ratio is 40%Operating…
Q: What do we mean by "capital costs," how do we explain them, and how are they different from…
A: There are different types of cost namely capital cost and another one is operational cost.Capital…
Q: Suppose you are going to receive $11,000 per year for 8 years. The appropriate interest rate is 11…
A: Present value is the estimation of the current value of future cash value which is likely to be…
Q: Haşmet Motor A.Ş.'s stock has a required rate of return of 27%, and it sells for 30TL per share.…
A: We need to use constant growth model to calculate current dividend Current stock price =…
Q: At year-end 2016, total assets for Arrington Inc. were $1.7 million and accounts payable were…
A: Balance sheet is one of the financial statement being used in business. It shows all assets,…
Q: f the cost of equity is 25%, the WACC is 16% and cost of debt is 10%, what will be the implied D/E…
A: WACC is the weighted average cost of debt and weighted average cost of equity and is the benchmark…
Q: Let there exist a non-dividend-paying stock, A, which has a current price of $80. Let there exist…
A: The value of the European exchange call option with underlying asset A and strike asset B is given…
Q: Capital rationing-NPV approach A firm with a 13.7% cost of capital must select the optimal group of…
A: It is a case of capital rationing where a limited budget for investments is used to generate the…
Q: Find the value of the improper integral. The Integral Diverges 3/4 3/2 dx 12 h
A: An improper integral is said to be definite if their exists a limit and the solution is a finite…
Q: Risk management is a process of analytical and management activities that focus on identifying and…
A: Risk management refers to the process of identifying, assessing, and prioritizing potential risks or…
Q: cost $350 per unit; fixed costs $4.86 million; quantity=76,000 units. Suppose the company believes…
A: The concept of Best case is associated with rising in the sales and total sales unit and it also…
Q: According to the IRS Amortization Rule, the interest deduction on a zero coupon bond is the increase…
A: The price of a zero coupon bond is the present value of its face value or redemption value at…
Q: required return is 13 percent. Year O 1 2 3 4 . Assume the Cash Flows -$90,000 $19,000 $31,000…
A: The profitability index (PI) is a financial metric used to evaluate the profitability of an…
Q: A corporation creates a sinking fund in order to have $680,000 to replace some machinery in 12…
A: Since you have posted a question with multiple sub-parts, we will provide the solution only to the…
Q: Your new job offers a savings plan that pays 0.75 percent in interest each month. You can't…
A: A) Here we calculate the future value of the investment by using excel formula =FV(rate,nper,pmt)…
Q: You have decided to buy a 3,250 square-feet house in Denton, close to a good public school. The…
A: Loans are paid by equal monthly installments and these carry the payment for interest and payment…
Q: wing quickly. Dividends are expected to grow at a rate of 20 percent for the next 3 years, with the…
A: Value of stock can be found as the present value of dividends from high growth period and dividends…
Q: The Ronald Co Ltd (RCL) is contemplating a $40 million national duplication of its replica division.…
A: With cost of equity, cost of debt, proportion of equity, proportion of debt and tax rate, WACC is…
Q: a. Assuming that all Sophia derivatives expire at the same date in the future, complete a table…
A: Please note under answering guidelines only 3 questions can be solved. The solution to question a…
Q: An investor is evaluating a “boom or bust” investment that in some years will generate an excellent…
A: It is a case of a series of cash flows that are expected to take place in the coming future. The…
Q: Following is the financial information of two companies. Calculate the price of the two companies.…
A: ABC Inc.PEG Ratio = 8Earning Per Share = EPS = $5Growth rate = g = 10%XYZ Inc.PEG Ratio = 4Earning…
Q: The table below presents bid-ask quotes for Swiss Francs (SF) from several currency dealers around…
A: There are currency dealers who operate in different countries and give different bid-ask quotations.…
Q: Use the following data to answer the question regarding the performance of Guardian Stock Fund and…
A: Information ratio is a measure of skill and ability of the portfolio's manager to create excess…
Q: On 1 October 2015 Mr. X an exporter enters into a forward contract with a BNP Bank to sell US$…
A: "Forward contracts" are agreements made between two parties to buy or sell a specific asset at a…
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
- Aggies Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018, and received $540,000. Interest is payable semi-annually. The premium is amortized using the straight-line method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. Dec. 31, 2018: entry to record payment of interest to bondholders C. Dec. 31, 2018: entry to record amortization of premiumOn January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?Present entries to record the selected transactions described below: Required: a. Issued $2,750,000 of 10-year, 8% bonds at 97.* b. Amortized bond discount for a full year, using the straight-line method.* c. Called bonds at 98. Assume the bonds were carried at $2,692,250 at the time of the redemption.* *Refer to the Chart of Accounts for exact wording of account titles. General Journal a. Issued $2,750,000 of 10-year, 8% bonds at 97 on January 1. Refer to the Chart of Accounts for exact wording of account titles. PAGE 1 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 2 3 b. Amortized bond discount for a full year, using the straight-line method, on December 31. Refer to the Chart of Accounts for exact wording of account titles. PAGE 1 JOURNAL…
- Cramer Corp. issued $20,000,000 of 5-year, 9% bonds at a market (effective) interest rate of 10%, receiving cash of $19,227.757. Interest on the bonds is payable semiannually. What is the entry to record the first semiannual interest payment, and the amortization of the bond discount, using the interest method?. On 1/1/21, Ehrlich Co. issued 4 year bonds with a face value of $700,000. The stated (bond) rate is 8%, payable semiannually on 1/1 and 7/1. The market rate at the time of issuance was 10%. a. Calculate the issue price of the bonds. b. Prepare the journal entry for the issuance of the bonds. c. Complete the amortization table below. Date cash paid interest expense amortization carrying value 1/1/21 7/1/21 1/1/22 7/1/22 d. Prepare the journal entries for the 7/1/21 interest payment and amortization, 12/31/21 interest accrual and amortization, and 1/1/22 interest payment. e. Prepare the journal entry for retirement of the bonds at maturity f. Assume instead that the bonds were redeemed on 7/1/22 at 102. Prepare the journal entry.Compute Bond Proceeds, Amortizing Premium by Interest Method, and Interest Expense Ware Co. produces and sells motorcycle parts. On the first day of its fiscal year, Ware Co. issued $40,000,000 of five-year, 13% bonds at a market (effective) interest rate of 11%, with interest payable semiannually. Compute the following: a. The amount of cash proceeds from the sale of the bonds. Use the tables of present values in Exhibit 8 and Exhibit 10. Round to the nearest
- On January 1, Year 1, Kennard Co. issued $2,000,000, 5%, 10-year bonds, with interest payable on June 30 and December 31 to yield 6%. The bonds were issued for $1,851,234. a. Prepare an amortization schedule for Year 1 and Year 2 using the effective interest rate method. Round answers to the nearest dollar. Enter all amounts as positive numbers. Amortization Table The Effective Interest Rate Method Interest Paid Interest Expense Amortization Bond Carrying Amount Date 1/1/Year 1 6/30/Year 1 12/31/Year 1 6/30/Year 2 12/31/Year 2 b. Show how this bond would be reported on the balance sheet at December 31, Year 2. Kennard Co. Partial Balance SheetCompute Bond Proceeds, Amortizing Premium by Interest Method, and Interest Expense Ware Co. produces and sells motorcycle parts. On the first day of its fiscal year, Ware Co. issued $70,000,000 of five-year, 14% bonds at a market (effective) interest rate of 12%, with interest payable semiannually. Compute the following: a. The amount of cash proceeds from the sale of the bonds. Use the tables of present values in Exhibit 8 and Exhibit 10. Round to the nearest dollar. 4,900,000 X b. The amount of premium to be amortized for the first semiannual interest payment period, using the interest method. Round to the nearest dollar. 4,900,000 The amount of premium to be amortized for the second semiannual interest payment period, using the interest method. Round to the nearest dollar. 4,900,000 X d. The amount of the bond interest expense for the first year. Round to the nearest dollar. 4,900,000 X Feedback Check My Work Remember, the selling price of a bond is the sum of the present values of:…Compute Bond Proceeds, Amortizing Premium by Interest Method, and Interest Expense Ware Co. produces and sells motorcycle parts. On the first day of its fiscal year, Ware Co. issued $90,000,000 of four-year, 14% bonds at a market (effective) interest rate of 12%, with interest payable semiannually. Compute the following: a. The amount of cash proceeds from the sale of the bonds. Use the tables of present values in Exhibit 8 and Exhibit 10. Round to the nearest dollar. b. The amount of premium to be amortized for the first semiannual interest payment period, using the interest method. Round to the nearest dollar. c. The amount of premium to be amortized for the second semiannual interest payment period, using the interest method. Round to the nearest dollar. d. The amount of the bond interest expense for the first year. Round to the nearest dollar. $
- On January 1, Year 1, Kenneth Cole Inc. issued $2,000,000, 5%, 10-year bonds, with interest payable on June 30, and December 31 to yield 6%. The bonds were issued for $1,851,234. : Given the above information, Prepare the amortization schedule for Year 1 and Year 2 using the effective interest rate method. Use the following format and round figures to nearest dollar. Date Cash Paid Interest Exp Amortization Bond Carrying ValuePresent entries to record the selected transactions described below: a. Issued $2,750,000 of 10-year, 8% bonds at 97. If an amount box does not require an entry, leave it blank. b. Amortized bond discount for a full year, using the straight-line method. If an amount box does not require an entry, leave it blank. c. Called bonds at 98. Assume the bonds were carried at $2,692,250 at the time of the redemption. If an amount box does not require an entry, leave it blank.Moss Co. issued $101,000 of four-year, 12% bonds with interest payable semiannually, at a market (effective) interest rate of 11%. Determine the present value of the bonds payable, using the present value tables in Exhibit 8 and Exhibit 10. Note: Round to the nearest dollar.