Answers
Answer:
It would reduce to -24.3185
Explanation:
I solved this on paper and have added the solution as an attachment
At 8% rate of interest the price of this bond is 1000
At 8.96% rate of interest the calculated price of the coupon bond is 975.681
975.681-1000 = -24.3185
When the interest rate falls from 8% to 8.96%, the price of the bond reduces by -24.3185
Related Questions
Black Acres Apartment, Inc needs to compute taxable income (TI) for the preceding year and wants your assistance. The effective gross income (EGI) was $52,000; operating expenses were $19,000; $2,000 was put into a fund for future replacement of stoves and refrigerators; debt service was $26,662, of which $25,126 was interest; and the deprecation deduction was $17,000. Compute the taxable income from operations:
Answers
Answer:
($9,126)
Explanation:
Computation for the taxable income from operations:
Effective Gross Income $52,000
Less: Operating Expenses($19,000)
Less: Capital Expenditures($2,000)
Net Operating Income $31,000
($52,000-$19,000-$2,000)
Add: CAPX $2,000
Less: Interest on Debt Service($25,126)
Less: Tax Deprecation($17,000)
Taxable Income (Loss)$(9,126)
($31,000+$2,000-$25,126-$17,000)
Therefore the taxable income from operations: is $(9,126)
You pay $75 for a ticket to a Drake concert. You think the ticket is worth $100. The night before the concert your friend offers you a free ticket to a Post Malone concert that you think is worth $80. What is the opportunity cost to you of going to the Drake concert instead of the Post Malone concert?a) $155b) $20c) $5d) $75e) $80
Answers
Answer: $80
Explanation:
The opportunity cost is regarded as the real cost of the alternative that was left or forgone.
Based on the information given in the question, the opportunity cost is the free ticket to a Post Malone concert that is worth $80 which was given to me by my friend.
Therefore, the correct option is E.
According to the liquidity preference model, the equilibrium interest rate is determined by the: International Monetary Fund. supply of and demand for money. supply of and demand for loanable funds. level of investment spending and saving.
Answers
Answer:
Supply of and demand for money.
Explanation:
The equilibrium interest rate is determined by the demand and supply of the money. The interest rate is represented by the verticle axis of the graph and supply and demand for money is represented by the horizontal axis. Thus, the point of intersection between supply curve and demand curve determines the equilibrium interest rate.
Harley-Davidson is a leading manufacturer of heavy-weight motorcycles. For each of the following recent transactions, indicate whether net cash inflows (outflows) from operating activities, investing activities, or financing activities are affected and whether the effect is an inflow or outflow, or use No effect if the transaction has no effect on cash. (Hint: Determine the journal entry recorded for the transaction. The transaction affects net cash flows if and only if the account Cash is affected.)
Answers
Answer:
Note See missing word as attached as picture below
1. Purchased raw materials inventory on account.
Indication: Cash flows from financing activities (No effect)
2. Prepaid rent for the following period.
Indication: Cash flows from operating activities (Outflow)
3. Purchased new equipment by signing a three-year note.
Indication: Cash flows from investing activities (No effect)
4. Recorded an adjusting entry for expiration of a prepaid expense.
Indication: Cash flows from operating activities (No effect)
5. Recorded and paid income taxes to the federal government.
Indication: Cash flows from operating activities (Outflow)
6. Purchased investment securities for cash.
Indication: Cash flows from investing activities (Outflow)
7. Issued common stock for cash.
Indication: Cash flows from financing activities (Inflow)
8. Collected payments on account from customers.
Indication: Cash flows from operating activities (Inflow)
9. Sold equipment for cash equal to its net book value.
Indication: Cash flows from investing activities (Inflow)
10. Issued long-term debt for cash.
Indication: Cash flows from financing activities (Inflow)
On January 1, 2017, ARC Inc. issued 100 5-year bonds, with a face value of $1,000 each and a coupon rate of 10%, payable semiannually. The interest is paid on June 30 and December 31 of each year. The market rate of interest at the time that the bonds were issued was 13%, so that the bonds were sold for $892 each.1. Interest expense for the January 1–June 30 period was $_____.
2. Interest expense for the July1–December 31 period was $_____.
3. Book value of Bonds on June 30 was $_____.
4. Book value of Bonds on December 31 was $_____.
5. Interest payment on June 30 was $_____.
Answers
Answer:
ARC Inc.
1. Interest expense for the January 1–June 30 period was $__5,798___.
2. Interest expense for the July 1–December 31 period was $__5,850___.
3. Book value of Bonds on June 30 was $__89,998___.
4. Book value of Bonds on December 31 was $__90,848___.
5. Interest payment on June 30 was $__5,000___.
Explanation:
a) Data and Calculations:
January 1, 2017:
Face value of issued bonds = $100,000 ($1,000 * 100)
Coupon rate of interest = 10%
Effective rate of interest = 13%
Price of issued bonds = $89,200 ($892 * 100)
Discount on bonds = $10,800 ($100,000 - $89,200)
Interest payment = June 30 and December 31 (semiannually)
June 30:
Interest expense = $5,798 ($89,200 * 6.5%)
Cash payment = $5,000 ($100,000 * 5%)
Amortization of discount = $798
Value of bonds = $89,998 ($89,200 + $798)
December 31, 2017:
Interest expense = $5,850 ($89,998 * 6.5%)
Cash payment = $5,000 ($100,000 * 5%)
Amortization of discount = $850
Value of bonds = $90,848 ($89,998 + $850)
Financial statements that must be included in the annual report include all of the following except: _____________
a. the statement of cash flows
b. the balance sheet
c. the cash budget
d. the income statement
Answers
Answer:
c
Explanation:
Match the types of analytics that can be used to answer the business questions. Which people are mentioned in a company's business documents?
Answers
Answer:
Predictive
Cognitive
Explanation:
Predictive analysis help to forecast about future. It helps to analyse and identify profitable business activities and make strategy for business progress. Cognitive analysis predicts business performance based on current patterns and existing data.
If fixed costs are $288,000, the unit selling price is $75, and the unit variable costs are $49, the old and new break-even sales (units), respectively, if the unit selling price increases by $5 are a.3,840 units and 11,077 units b.11,077 units and 3,840 units c.11,077 units and 9,290 units d.5,878 units and 8,790 units
Answers
Answer:
Results are below.
Explanation:
Giving the following information:
Fixed costs= $288,000
Selling price= $75
Unitary variable costs= $49
To calculate the break-even point in units, we need to use the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 288,000 / (75 - 49)
Break-even point in units= 11,077
Now, if the selling price is $80:
Break-even point in units= 288,000 / (80 - 49)
Break-even point in units= 9,290
Felix's profit is maximized when he produces teddy bears. When he does this, the marginal cost of the last teddy bear he produces is $ , which is than the price Felix receives for each teddy bear he sells. The marginal cost of producing an additional teddy bear (that is, one more teddy bear than would maximize his profit) is $ , which is than the price Felix receives for each teddy bear he sells. Therefore, Felix's profit-maximizing quantity corresponds to the intersection of the curves. Because Felix is a price taker, this last condition can also be written as .
Answers
On June 1, $40,000 of treasury bonds were purchased between interest dates. The broker commission was $600. The bonds pay interest at 12%, which is paid semiannually on January 1 and July 1. How much interest revenue will be recorded on July 1?
a. $400.
b. $2,000.
c. $2,400.
d. $406.
Answers
Answer: $400
Explanation:
The amount of interest revenue that will be recorded on July 1 will be calculated thus:
Interest revenue = Face value × Interest percentage × 1/12
= $40,000 × 12% × 1/12
= $40000 × 0.12 × 0.08333
= $400
Therefore, the interest revenue that will be recorded on July 1 is $400.
Which type of budgeting requests for investment in large assets such as buildings, renovations, software systems and furniture
Answers
The type of budgeting requests for investment in large assets is buildings.
An investment property is real estate property purchased with the intention of earning a return on the investment either through rental income, the future resale of the property, or both.
Why do people invest in buildings?Key Takeaways. Real estate investors make money through rental income, appreciation, and profits generated by business activities that depend on the property. The benefits of investing in real estate include passive income, stable cash flow, tax advantages, diversification, and leverage.
Apartment buildings frequently get sold on the basis of their cap rate, which is effectively a multiple of the income they produce. If you increase your building's income by raising rents or cutting expenses, you should be able to sell for a profit.
To learn more about investment in buildings, refer
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Using the information provided extract the necessary information and compute the Quick Ratio.
Current Assets $50, 000
Current Asset $25, 000
Inventory $ 5,000
Accounts Receivable $ 7,000
Notes Payable $8,000
Answers
Answer:
right option is d
account receivable $ 7, 000
Explanation:
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Item 5At the end of the day, the cash register's record shows $2,050, but the count of cash in the cash register is $2,058. The correct entry to record the cash sales is
Answers
Answer:
Debit Cash $2,058; credit Cash Over and Short $8; credit Sales $2,050
Explanation:
The journal entry is shown below:
Cash Dr $2,058
To cash over and short $8
To sales $2,050
(Being the cash sales is recorded)
Here the cash is debited as it increased the assets and sales is credited as it increased the revenue and the difference is credited to the cash over and short
Which of the following is NOT an accurate description of modern marketing?
Marketing involves managing profitable customer relationships.
Marketing involves satisfying customers' needs.
O Marketing is the creation of value for customers.
Marketing emphasizes selling and advertising exclusively.
O Marketing is building value-laden exchange relationships with customers.
Answers
I'm stuck between
Marketing is the creation of value for customers and
Marketing emphasizing selling and advertising exclusively l.
S Corporation makes 41,000 motors to be used in the production of its sewing machines. The average cost per motor at this level of activity is: Direct materials $ 10.00 Direct labor $ 9.00 Variable manufacturing overhead $ 3.70 Fixed manufacturing overhead $ 4.65 An outside supplier recently began producing a comparable motor that could be used in the sewing machine. The price offered to S Corporation for this motor is $25.45. If S Corporation decides not to make the motors, there would be no other use for the production facilities and none of the fixed manufacturing overhead cost could be avoided. Direct labor is a variable cost in this company. The annual financial advantage (disadvantage) for the company as a result of making the motors rather than buying them from the outside supplier would be:
Answers
Answer:
$112,750
Explanation:
Particulars Cost of making Cost of buying
Direct material 41,000*10=410,000 0
Direct labor 41,000*9=369,000 0
Variable manuf. overhead 41,000*3.70=151,700 0
Fixed manuf. overhead 41,000*4.65=190,650 41,000*4.65=190,650
Outside supplier's price 0 41,000*25.45=1,043,450
Total cost $1,121,350 $1,234,100
Financial advantage of making the motors = $1,234,100 - $1,121,350
Financial advantage of making the motors = $112,750
A vendor sells hot dogs at $17.00 /piece. For every hot dog he spends $11.23 in the raw material. Additionally he spends $0.90 for packing each hotdog and monthly $46.00, $25.00, $13.00 as food truck rent, electricity and other expenses respectively. How much is the vendor contributing to covering his fixed costs or generating profits
Answers
Answer: $4.87
Explanation:
The question is asking for the Contribution margin which is the amount left of the selling price after the variable costs have been deducted.
Contribution margin = Selling price - variable costs
= Selling price - Raw materials - packing costs
= 17 - 11.23 - 0.90
= $4.87
The quantity demanded for money is higher in Japan than in the United States because: telecommunications and information technology is more advanced in the United States than in Japan. Japanese interest rates are higher than those in the United States. Japanese interest rates are lower than those in the United States. Japanese consumers use credit cards more than people in the United States.
Answers
Answer:
Japanese interest rates are lower than those in the United States.
Explanation:
The demand for money (the decision to hold money) is inversely related to interest rate. if interest rate is high, individuals would prefer to hold bonds and the demand for money would fall. if interest rate is low, individuals would prefer to hold money.
the opportunity cost of holding money is what would have been earned if money was invested. if interest rate is low, individuals would prefer to hold more money because the amount that would be earned if money was invested in bonds would be low, so the opportunity cost of holding money would be low
If the demand for money is higher in Japan than in the United States, it is because interest rates are lower in Japan
Tri Fecta, a partnership, had revenues of $364,000 in its first year of operations. The partnership has not collected on $46,700 of its sales and still owes $38,000 on $175,000 of merchandise it purchased. There was no inventory on hand at the end of the year. The partnership paid $33,100 in salaries. The partners invested $48,000 in the business and $27,000 was borrowed on a five-year note. The partnership paid $2,430 in interest that was the amount owed for the year and paid $8,900 for a two-year insurance policy on the first day of business. Ignore income taxes.Compute the net income for the first year for Tri Fecta
A. $189,000
B. $155,900
C.$149,020
D.$233,430
Answers
Answer:
C
Explanation:
Black Company's unadjusted and adjusted trial balances on December 31 of the current year are as follows
Answers
Answer:
wdym
Explanation:
On January 1, 2019, Caswell Company signs a 10-year cancelable (at the option of either party) agreement to lease a storage building from Wake Company. The following information pertains to this lease agreement:
1. The agreement requires rental payments of $100,000 at the beginning of each year.
2. The cost and fair value of the building on January 1, 2019, is $2 million. The storage building has not been specialized for Caswell.
3. The building has an estimated economic life of 50 years, with no residual value. Caswell depreciates similar buildings according to the straight-line method.
4. The lease does not contain a renewable option clause. At the termination of the lease, the building reverts to the lessor.
5. Caswell’s incremental borrowing rate is 14% per year. Wake set the annual rental to ensure a 16% rate of return (the loss in service value anticipated for the term of the lease). Caswell knows the implicit interest rate.
6. Executory costs of $7,000 annually, related to taxes on the property, are paid by Caswell directly to the taxing authority on Dec. 31 of each year.
Required:
1. Determine what type of lease this is for the lessee.
2.
Prepare appropriate journal entries on the lessee’s books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2019 and 2020.
Question not attempted.
PAGE 2019
GENERAL JOURNAL
Score: 0/113
DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT
1
2
3
4
5
6
7
8
9
Points:
0 / 22
Record the payments and expenses related to this lease on December 31 for 2020.
Question not attempted.
PAGE 2020
GENERAL JOURNAL
Score: 0/88
DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT
1
2
3
4
5
6
7
Answers
A company pays $20,000 for the rights to a well with 5 million gallons of water. If the company extracts 250,000 gallons of water in the first year, what is the total depletion in year 1
Answers
Answer: $1,000
Explanation:
The cost of the well is $20,000
The capacity of the well is 5 million gallons
The cost of one gallon is therefore:
= Cost of all gallons / Number of gallons
= 20,000 / 5,000,000
= $0.004
If 250,000 gallons were extracted in the first year, the depletion is:
= Number of gallons extracted * Cost per gallon
= 250,000 * 0.004
= $1,000
Aaron Company estimates direct labor costs and manufacturing overhead costs for the coming year to be $800,000 and $500,000, respectively. Aaron allocates overhead costs based on machine hours. The estimated total labor hours and machine hours for the coming year are 16,000 hours and 10,000 hours, respectively. What is the predetermined overhead allocation rate?
a. $0.00 per machine hour
b. $81.25 per labor hour
c. $50.00 per machine hour
d. $51.25 per labor hour
Answers
Answer:
c. $50.00 per machine hour
Explanation:
Calculation to determine the predetermined overhead allocation rate
Using this formula
Predetermined overhead allocation rate=Manufacturing overhead costs/Machine hours
Let plug in the formula
Predetermined overhead allocation rate=$500,000/10,000
Predetermined overhead allocation rate=$50.00 per machine hour
Therefore Predetermined overhead allocation rate is $50.00 per machine hour
A corporation has the following account balances: Common stock, $1 par value, $60,000; Paid-in Capital in Excess of Par, $1,300,000. Based on this information, the :_________.
A. legal capital is $1,360,000.
B. number of shares issued are 60,000.
C. number of shares outstanding are 1,360,000.
D. average price per share issued is $22.50.
Answers
Answer:
B. number of shares issued are 60,000.
Explanation:
The computation is shown below:
Since the value of the common stock is $60,000 and the par value is $1
So, the number of common shares issued is
= $60,000 ÷ $1
= 60,000
Hence, the number of shares issued is 60,000
Therefore, the option b is correct
The following information is available for Jorgensen Company: a. The Cash Budget for March shows a bank loan of $10,000 and an ending cash balance of $48,000. b. The Sales Budget for March indicates sales of $120,000. Accounts receivable is expected to be 70% of March sales.
Answers
Answer:
Accounts receivable is
Explanation:
Expected accounts receivable is 70% of sales amount. The sales budget is $120,000 then accounts receivable will be $84,000. The rest of sales will be in cash, so the cash collection for the month of march will be $36,000. The new cash balance will be $36,000 + $48,000 = 84,000.
Gabbe Industries is a division of a major corporation. Last year the division had total sales of $23,826,400, net operating income of $2,835,342, and average operating assets of $9,164,000. The company's minimum required rate of return is 19%.
Answers
Answer:
a. Division margin:
= Net operating income / Total sales
= 2,835,342 / 23,826,400
= 11.9%
b. Division turnover:
= Sales / Total assets
= 23,826,400 / 9,164,000
= 2.6 times
c. Division ROI:
= Net operating income / Total assets
= 2,835,342 / 9,164,000
= 30.94%
Simon Company’s year-end balance sheets follow. At December 31 Current Yr 1 Yr Ago 2 Yrs Ago Assets Cash $ 31,800 $ 35,625 $ 37,800 Accounts receivable, net 89,500 62,500 50,200 Merchandise inventory 112,500 82,500 54,000 Prepaid expenses 10,700 9,375 5,000 Plant assets, net 278,500 255,000 230,500 Total assets $ 523,000 $ 445,000 $ 377,500 Liabilities and Equity Accounts payable $ 129,900 $ 75,250 $ 51,250 Long-term notes payable secured by mortgages on plant assets 98,500 101,500 83,500 Common stock, $10 par value 163,500 163,500 163,500 Retained earnings 131,100 104,750 79,250 Total liabilities and equity $ 523,000 $ 445,000 $ 377,500 (1-a) Compute the current ratio for each of the three years. (1-b) Did the current ratio improve or worsen over the three year period? (2-a) Compute the acid-test ratio for each of the three years. (2-b) Did the acid-test ratio improve or worsen over the three year period?
Answers
Answer:
Simon Company
1-a) Current ratio = 1.88 2.52 2.87
= Current assets/Current liabilities
1-b. The current ratio worsened over the three-year period.
2-a) Acid-test ratio = 1.02 1.43 1.81
= (Current assets - Inventory)/Current liabilities
2-b) The acid-test ratio worsened over the three-year period.
Explanation:
a) Data and Calculations:
At December 31 Current Yr 1 Yr Ago 2 Yrs Ago
Assets
Cash $ 31,800 $ 35,625 $ 37,800
Accounts receivable, net 89,500 62,500 50,200
Merchandise inventory 112,500 82,500 54,000
Prepaid expenses 10,700 9,375 5,000
Total current assets $244,500 $190,000 $147,000
Plant assets, net 278,500 255,000 230,500
Total assets $ 523,000 $ 445,000 $ 377,500
Liabilities and Equity
Accounts payable $ 129,900 $ 75,250 $ 51,250
Long-term notes payable secured by
mortgages on plant assets 98,500 101,500 83,500
Common stock, $10 par value 163,500 163,500 163,500
Retained earnings 131,100 104,750 79,250
Total liabilities and equity $ 523,000 $ 445,000 $ 377,500
1-a) Current ratio = 1.88 2.52 2.87
= Current assets/Current liabilities
= Total current assets $244,500 $190,000 $147,000
Accounts payable $ 129,900 $ 75,250 $ 51,250
1-b. The current ratio worsened over the three-year period.
2-a) Acid-test ratio = 1.02 1.43 1.81
= (Current assets - Inventory)/Current liabilities
Current assets - Inventory $132,000 $107,500 $93,000
Accounts payable $ 129,900 $ 75,250 $ 51,250
2-b) The acid-test ratio worsened over the three-year period.
Paxton Company can produce a component of its product that incurs the following costs per unit: direct materials, $9.50; direct labor, $13.50, variable overhead $2.50 and fixed overhead, $7.50. An outside supplier has offered to sell the product to Paxton for $33.00. Compute the net incremental cost or savings of buying the component.
Answers
Answer:
$7.50 per unit
Explanation:
Cost of buying from outside supplier = $33 per unit.
Relevant cost of making such component in-house = Direct materials+ Direct labor+ Variable overhead
= $9.50 per unit + $13.50 per unit + $2.50 per unit
= $25.50 per unit
Net incremental cost of buying the component = Cost of buying from outside supplier- Relevant cost of making such component in-house
= $33.00 per unit - $25.50 per unit
= $7.50 per unit
Suppose Brian and Crystal are playing a game in which both must simultaneously choose the action Left or Right. The payoff matrix that follows shows the payoff each person will earn as a function of both of their choices. For example, the lower-right cell shows that if Brian chooses Right and Crystal chooses Right, Brian will receive a payoff of 5 and Crystal will receive a payoff of 6.
Crystal
Left Right
Left 6, 3 6,4
Brian Right 3, 3 7,4
The only dominant strategy in this game is for_____to choose____. The outcome reflecting the unique Nash equilibrium in this game is as follows: Brian chooses____and Crystal chooses____.
Answers
Answer:
The only dominant strategy in this game is for Crystal to choose Right. The outcome reflecting the unique Nash equilibrium in this game is as follows: Brian chooses Right and Crystal chooses Right.
Explanation:
Given:
Crystal
Left Right
Brian Left 6, 3 6, 4
Right 3, 3 7, 4
A dominant strategy refers to a strategy that makes a player being better off regardless of the choice his opponent in a game.
It can be seen from the payoff matrix above that when Brian plays Left, Crystal chooses Right because 4 > 3. Also, when Brian plays Right, Crystal chooses Right because 4 > 3. The indication of this is that Crystal will always choose Right no matter what Brian chooses. This means that the dominant strategy for Crystal is Right.
On the other hand, when Crystal Chooses Left, Brian will also choose Left because 6 > 3. And when Crystal chooses Right, Brian will also play Right because 7 > 6. This is an indication that Brian does not have any specific strategy that makes him better off. Therefore, Brian does not have a dominant strategy.
Based on the analysis above, we have:
The only dominant strategy in this game is for Crystal to choose Right. The outcome reflecting the unique Nash equilibrium in this game is as follows: Brian chooses Right and Crystal chooses Right.
You are evaluating five different investments, all of which involve an upfront outlay of cash. Each investment will provide a 2 Review Only Click the icon to see the Worked Solution (Calculator Use). single cash payment back to you in the future. Details of each investment appears here: . Calculate the IRR of each investment. State your answer to the nearest basis point (i.e., the nearest 1/100th of 1%, such as 3.76%)
Answers
Answer:
8.27%
4.69%
10.77%
9.47%
4.81%
Explanation:
Please find attached the diagram of the cash flows
Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested
IRR = (future value / present value)^(1/n)
n = number of years
1. (2637/1100)^(1/11) - 1 = 8.27
2. (13091 / 9500)^(1/7) - 1 = 4.69
3. (1855 / 400)^(1/15) - 1 = 10.77
4. (5030 / 3200)^(1/5) - 1 = 9.47
5. (9598 / 6000)^(1/10) - 1 = 4.81
Senior managers have an increasingly important role in top management because of their ability to think strategically. Most bring multi-industry backgrounds, cross-functional management expertise, analytical skills, and intuitive marketing insights to their job. These individuals are referred to as:__________
a. chief financial officer.
b. chief marketing officer.
c. chief executive officer.
d. chief human resource officer.
e. chief manufacturing officer.
Answers
Answer:
b. chief marketing officer.
Explanation:
A Chief Marketing Officer (CMO) is a person that is responsible for watching the proper planning, development and the execution of the marketing & advertising initiatives taken by the company. Here the message of an organization should be distributed across the various channels and targeted audience so that the sales goals could be met out
Therefore the option b is correct
