Managerial Accounting: Tools for Business Decision Making
7th Edition
ISBN: 9781118334331
Author: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Publisher: WILEY
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Textbook Question
Chapter A, Problem A.27BE
Using a financial calculator, solve for the unknowns in each of the following situations.
(a) On June 1, 2016, Jennifer Lawrence purchases lakefront property from her neighbor. Josh Hutcherson, and agrees to pay the purchase price in seven payments of $16,000 each, the first payment to be payable June 1, 2017. (Assume that interest compounded at an annual rate of 7.35% is implicit in the payments.) What is the purchase price of the property?
(b) On January 1, 2016, Gerrard Corporation purchased 200 of the $1,000 face value, 8% coupon. 10-year bonds of Sterling Inc. The bonds mature on January 1,2026, and pay interest annually beginning January 1, 2017. Gerrard purchased the bonds to yield 10.65%. How much did Gerrard pay for the bonds?
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Using a financial calculator, solve for the unknowns in each of the following situations.
(a) On June 1, 2021, Kimberly Lawrence purchases lakefront property from her neighbor, Josh Hutcherson, and agrees to pay the
purchase price in 12 payments of $21,500 each, the first payment to be payable June 1, 2022. (Assume that interest compounded at an
annual rate of 8.30% is implicit in the payments.) What is the purchase price of the property? (Round answer to 2 decimal places, e.g.
25.25.)
Purchase price of the property
(b) On January 1, 2021, Crane Corporation purchased 200 of the $1,000 face value, 7% coupon, 10-year bonds of Sterling Inc. The
bonds mature on January 1, 2031, and pay interest annually beginning January 1, 2022. Crane purchased the bonds to yield 9.90%.
How much did Crane pay for the bonds? (Round answer to 2 decimal places, e.g. 25.25.)
Crane paid for the bonds
Problem:
Answer the following questions completely. Show all computations. Round off only the final answers to two decimal places.
Â
On June 26, 2019, Sarah obtained a loan of P150,000 from a local businessman. The interest rate on the loan was 7.75% and it is to be paid on November 15, 2020.
What is the exact time from June 26, 2019, to November 15, 2020?Â
What is the approximate time from June 26, 2019, to November 15, 2020?Â
What is the Ordinary simple interest using exact time?Â
What is the Ordinary simple interest using approximate time?Â
What is the Exact simple interest using exact time?
What is the Exact simple interest using approximate time?Â
If Sarah was given the option to choose the type of interest to use, which should she had chosen? Explain why in one sentence.
Belinda purchased a 120-day $200,000 bank bill (at a simple interest rate) on 14 March 2022. The purchase price was $197,000. She sold this
bank bill on 22 April 2022.
(b) Assume that Belinda sold this bank bill at a price of $197,800 and deposited all sale proceeds into an account to earn a simple interest rate
of 3.41% p.a. up to the maturity date of the above bank bill. What is the annualised (simple interest) yield for this 120-day investment?
a. 0.03801
O b. 0.03575
c. 0.03546
O d. 0.03518
Chapter A Solutions
Managerial Accounting: Tools for Business Decision Making
Ch. A - Prob. A.1BECh. A - Kor each of the following cases, indicate (a) what...Ch. A - Liam Company signed a lease for an office building...Ch. A - Prob. A.4BECh. A - Prob. A.5BECh. A - Prob. A.6BECh. A - For each of the following cases, indicate (a) what...Ch. A - Prob. A.8BECh. A - Prob. A.9BECh. A - Prob. A.10BE
Ch. A - Prob. A.11BECh. A - Prob. A.12BECh. A - Dempsey Railroad Co. is about to issue 400,000 of...Ch. A - Prob. A.14BECh. A - Neymar Taco Company receives a 75,000, 6-year note...Ch. A - Prob. A.16BECh. A - Frazier Company issues a 10%, 5-year mortgage note...Ch. A - Prob. A.18BECh. A - Prob. A.19BECh. A - Prob. A.20BECh. A - Prob. A.21BECh. A - Prob. A.22BECh. A - Prob. A.23BECh. A - Prob. A.24BECh. A - Prob. A.25BECh. A - As the purchaser of a new house, Carrie Underwood...Ch. A - Using a financial calculator, solve for the...Ch. A - Using a financial calculator, provide a solution...
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