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madreJ [45]
3 years ago
11

On January 1, 2021, Tiny Tim Industries had outstanding $1,000,000 of 9% bonds with a book value of $970,500. The indenture spec

ified a call price of $987,000. The bonds were issued previously at a price to yield 11% and interest payable semi-annually on July 1 and January 1. Tiny Tim called the bonds (retired them) on July 1, 2021. What is the amount of the loss on early extinguishment?
Business
1 answer:
nevsk [136]3 years ago
6 0

Answer:

loss at extinguishment 8,122.50 dollars

Explanation:

we should compare the amount we pay for the bonds and the book value of the bonds:

book value   978,877.50*

call price   <u>   (987,000.00)  </u>

loss                    (8,122.50)

*We are given with the value at January 1st we must adjust for the value at july 1st using effective-rate method

970,500 x 11%/2 = 53,377.5 interest expense

1,000,000 x 9%/2 = 45,000 cash outlay

amortization               8,377.5

<em><u /></em>

<em><u>carrying value:</u></em>

970,500 + 8,377.5 = 978,877.5

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Answer:

$1,061.28

Explanation:

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This will be the present value AKA market price which yields the minimun rate of 7.1225%

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3 years ago
Geneva Company manufactures dolls that are sold to various distributors. The company produces at full capacity for six months ea
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I think the answer is c because u make 500 thousand a year
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3 years ago
Suppose a​ 40-year-old person deposits ​$12 comma 00012,000 per year in an Individual Retirement Account until age 65. Find the
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Answer:  interest earned = $8942372340

$8942672340 this is amount after 25 years.

Explanation:

formula used:    S= R*[ (1+<em>i </em>)ⁿ-1 / <em>i </em>]

where:

S is future value

R is periodic payment

<em>i </em> is interest rate period

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<em>i </em>= 55% which is equal to 0.55

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interest earned = future value - total money deposited

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3 years ago
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Genrish500 [490]

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Option B is correct.

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