Waterway Inc. manufactures cycling equipment. Recently, the vice president of operations of the company has requested constructionof a new plant to meet the increasing demand for the company's bikes. After a careful evaluation of the request, the board of directorshas decided to raise funds for the new plant by issuing $3,088,700 of 14% term corporate bonds on March 1, 2025, due on March 1,2040, with interest payable each March 1 and September 1. At the time of issuance, the market interest rate for similar financialinstruments is 12%.Click here to view factor tables.As the controller of the company, determine the selling price of the bonds. (Round factor values to 5 decimal places, e.g. 1.25124 and finalanswer to O decimal places, e.g. 458,581.)Selling price of the bonds $

Selling price of bonds would be present value of interest annuity & maturity amount at market…

Answered: Waterway Inc. manufactures cycling…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Metlock Inc. manufactures cycling equipment. Recently, the vice president of operations of the company has requested construction of a new plant to meet the increasing demand for the company's bikes. After a careful evaluation of the request, the board of directors has decided to raise funds for the new plant by issuing $3,018,500 of 8% term corporate bonds on March 1, 2025, due on March 1, 2040, with interest payable each March 1 and September 1. At the time of issuance, the market interest rate for similar financial instruments is 6%. Click here to view factor tables. As the controller of the company, determine the selling price of the bonds. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.)
Vishnu
Teal Mountain Inc. is building a new hockey arena at a cost of $2,900,000. It received a down payment of $580,000 from local businesses to support the project, and now needs to borrow $2,320,000 to complete the project. It therefore decides to issue $2,320,000 of 10-year, 10.5% bonds. These bonds were issued on January 1, 2020, and pay interest annually on each January 1. The bonds yield 10% to the investor and have an effective interest rate to the issuer of 10.4053%. (There is an increased effective interest rate due to the capitalization of the bond issue costs.) Any additional funds that are needed to complete the project will be obtained from local businesses. Teal Mountain Inc. paid and capitalized $58,000 in bond issuance costs related to the bond issue. Teal Mountain prepares financial statements in accordance with IFRS. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. (a) Using (1) factor tables, (2)…
Windsor Inc. manufactures cycling equipment. Recently, the company's vice-president of operations has requested construction of a new plant to meet the increasing demand for the company's bikes. After a careful evaluation of the request, the board of directors has decided to raise funds for the new plant by issuing $2,290,000 of 13% term corporate bonds on March 1, 2023, due on March 1, 2037, with interest payable each March 1 and September 1. At the time of issuance, the market interest rate for similar financial instruments is 12%.
Windsor Inc. manufactures cycling equipment. Recently, the company's vice-president of operations has Pequest new plant to meet the increasing demand for the company's bikes. After a careful evaluation of the request, the board of directors ha decided to raise funds for the new plant by issuing $2,290,000 of 13% term corporate bonds on March 1, 2023, due on March 1, 203 with interest payable each March 1 and September 1. At the time of issuance, the market interest rate for similar financial instrumem is 12%. (a) As Windsor's controller, determine the selling price of the bonds. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 5,275.)
The college is considering funding options for new engineering building on campus. The money has been raised for the construction costs and now the focus is raising funds for the annual upkeep and maintenance (U&M) expenses. For this building, contractors will be hired with a series of 3-year agreements over the 30 years. Under each contract the university will pay $125,000 at the beginning of each 3-year agreement to cover all U&M building expenses over that 3-year period. The first 3-year agreement begins when the building opens. A wealthy alumnus (you one day) has agreed to donate enough at the building opening to cover the U&M expenses over the 30- year term. If money invested by the school's engineering foundation earns 6% interest compounded quarterly, how much must be donated. (Hint: Build a spreadsheet like the one below) Year 0 3 6 9 12 15 18 21 24 27 Cost Rate Cash Flow FERH $125,000 $ 125,000.00 Present Worth 6% $125,000 3 year U&M Contract Cost Annual Interest Rate…
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Coronado Co. is building a new hockey arena at a cost of $2,420,000. It received a downpayment of $510,000 from local businesses to support the project, and now needs to borrow $1,910,000 to complete the project. It therefore decides to issue $1,910,000 of 10.0%, 10-year bonds. These bonds were issued on January 1, 2024, and pay interest annually on each January 1. The bonds yield 9%. Click here to view factor table. (a) Your answer is partially correct. Prepare the journal entry to record the issuance of the bonds on January 1, 2024. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to O decimal places, e.g. 58,971. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.) Date January 1, 2024 Account Titles and Explanation Cash Premium on Bonds Payable…
! Required information [The following information applies to the questions displayed below.] On January 1, 2024, Water World issues $26 million of 7% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. Water World intends to use the funds to build the world's largest water avalanche and the "tornado"- a giant outdoor vortex in which riders spin in progressively smaller and faster circles until they drop through a small tunnel at the bottom. 3-a. If the market rate is 8%, calculate the issue price. (FV of $1, PV of $1. FVA of $1, and PVA of $1) 3-b. Will the bonds issue at face amount, a discount, or a premium? Complete this question by entering your answers in the tabs below. Req 3a Req 3b If the market rate is 8%, calculate the issue price. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Note: Use tables, Excel, or a financial calculator. Enter your answers in dollars not in millions (i.e., $5.5 million should be entered as 5,500,000).…
Pina Co. is building a new hockey arena at a cost of $2,510, 000. It received a downpayment of $490,000 from local businesses to support the project, and now needs to borrow $ 2,020,000 to complete the project. It therefore decides to issue $2,020,000 of 10.0 %, 10- year bonds. These bonds were issued on January 1, 2024, and pay interest annually on each January 1. The bonds yield 9% . Assume that on July 1, 2027, Pina Co. redeems half of the bonds at a cost of $1,079, 300 plus accrued interest. Prepare the journal entry to record this redemption.
Splish Inc. manufactures cycling equipment. Recently, the vice president of operations of the company has requested construction of a new plant to meet the increasing demand for the company’s bikes. After a careful evaluation of the request, the board of directors has decided to raise funds for the new plant by issuing $3,205,500 of 10% term corporate bonds on March 1, 2020, due on March 1, 2035, with interest payable each March 1 and September 1, with the first interest payment on September 1st, 2020. At the time of issuance, the market interest rate for similar financial instruments is 8%.As the controller of the company, determine the selling price of the bonds. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Selling price of the bonds $
On January 1, 2024, the Mason Manufacturing Company began construction of a building to be used as its office headquarters. The building was completed on September 30, 2025. Expenditures on the project were as follows: January 1, 2024 March 1, 2024 June 30, 2024 October 1, 2024 January 31, 2025 April 30, 2025 August 31, 2025 On January 1, 2024, the company obtained a $3,900,000 construction loan with a 12% interest rate. The loan was outstanding all of 2024 and 2025. The company's other interest-bearing debt included two long-term notes of $6,000,000 and $9,000,000 with interest rates of 8% and 10%, respectively. Both notes were outstanding during all of 2024 and 2025. Interest is paid annually on all debt. The company's fiscal year-end is December 31. Required: 1. Calculate the amount of interest that Mason should capitalize in 2024 and 2025 using the specific interest method. 2. What is the total cost of the building? 3. Calculate the amount of interest expense that will appear in…

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