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Fofino [41]
4 years ago
12

A discount on bonds payable: Multiple Choice Occurs when a company issues bonds with a contract rate less than the market rate.

Occurs when a company issues bonds with a contract rate more than the market rate. Increases the Bond Payable account. Decreases the total bond interest expense. Is not allowed in many states to protect creditors.
Business
1 answer:
earnstyle [38]4 years ago
6 0

Answer:

Occurs when a company issues bonds with a contract rate less than the market rate.

Explanation:

As we know that

The premium on bond payable arise when the company issued the amount more than the face value amount this result in high interest rate as compared with the market interest rate

While on the other hand, the discount on note payable arise when the issued amount is less than the face value that results in low interest rate as compared with the market interest rate

Hence, the first option is correct

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Suppose the spot rates for 1 and 2 years are s1=6.3% and s2=6.9% with annual compounding. recall that in this course interest ra
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Since the problem assumes annual compounding, then the relationship of forward rate and spot rates is given in the equation:

f1,2 = ((s2^2 / s1) - 1)

Therefore,

f1,2 = ((1.069^2 / 1.063) - 1)

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Forward rate is 7.5%.

4 0
3 years ago
"Jobs Now is an employment website. Like its competitors, it offers free listings in every category, which is free for job seeke
Savatey [412]

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A revenue model

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8 0
3 years ago
You are interested in purchasing a used car for $17,250. The dealer offers financing at a rate of 6.8% APR when the purchase is
Nastasia [14]

Answer:

<em>The monthly payments will be $353.12</em>

Explanation:

<u>Financing</u>

When a purchase is made at present value and the payment will be financed at a rate of interest i for n periods, the present value PV is

\displaystyle PV=R\cdot \frac{1-(1+i)^{-n}}{i}

where R is the regular payment (usually monthly).

Solving for R

\displaystyle R=PV\cdot \frac{i}{1-(1+i)^{-n}}

It's important to recall than only the unpaid amount goes financing, if some down-payment is made, it must be subtracted from the PV to be financed.

The present value of the car is 17,250 from which the buyer will make a 5%  down-payment. It means that the real financing amount is

PV=17,250\cdot 95\%=16,387.5

The rate of interest is

i=6.8\%=6.8/(12\cdot 100)=0.00567

It also follows that n=54.

Computing R

\displaystyle R=16,387.5\cdot \frac{0.00567}{1-(1+0.00567)^{-54}}

\boxed{R=\$353.12}

7 0
4 years ago
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