<span>Consumer behavior ...............
</span>
Answer:
Price of bond= $1,922.92
Explanation:
<em>The value of the bond is the present value(PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV). </em>
Value of Bond = PV of interest + PV of RV
Semi-annual interest = 4.93% × 2,000 × 1/2 =49.3
Semi-annual yield = 5.29%/2= 2.65%
PV of interest payment
PV = A (1- (1+r)^(-n))/r
A- 49.3, r-0.02645, n- 16×2
= 49.3× (1-(1.02645)^(-10)/0.02645)
= 1,055.521
PV of redemption Value
<em>PV = F × (1+r)^(-n)
</em>
F-2000, r-0.02645, n- 16
×2
PV = 2,000 × 1.02645^(-16×2)
PV = 867.402
Price of Bond
1055.52 + 867.40 =1,922.92
= $1,922.92
Answer:
The journal entry which is to be reported on January 1 is shown below:
Explanation:
The journal entry which is to be reported on January 1 for the issuance is as:
On January 1
Cash A/c............................Dr $600,000
Notes Payable A/c..........Cr $600,000
Being the issuance as well as proceeds of the note is recorded
On January 1, the company issues as well as proceeds the note, so, the cash account is debited as the cash is increasing and any increase in asset is debited. Therefore, the cash account is debited. And the note will become payable, which lead to increase in liability and any increase in liability is credited. So, the notes payable is credited
Answer:
b. $5,560
Explanation:
The computation of the total interest revenue is shown below:
The five equal annual year-end payments = $5,009
For five years, the total amount is
= $5,009 × 5 years
= $25,045
And, the present value of recording the note is $19,485
So, the total interest revenue earned would be
= Five years amount - present value of recording the note
= $25,045 - $19,485
= $5,560
