Answer:
c.a $1,000 bond sold for $1,012.50.
Explanation:
We assume the par value is $1,000 and since the bond is issued at 101.25 that means its selling price is
= $1,000 × 101.25%
= $1,012.50
Since the bond is issued more than the face value that reflects the premium and if the bond is issued less than the face value so it is issued at a discount
So the right option is c.
Answer:
the depreciation expense on the equipment will be 1,785 for tax purpose.
Explanation:
We will look into the MACRS (Modified Accelerated Cost Recovery System)
table for a property of seven years placen into service in the 4th quarter:
Which give us 3.57%
now we multiply the basis by the coefficient and get the value for depreciation
50,000 x 3.57% = 1,785 depreciation expense under MACRS
Answer:
Required return 10.27%
Dividend yield 5.77%
Expected capital gains yield 4.5%
Explanation:
Calculation for required return using this formula
A. R = (D1 / P0) + g
Let plug in the formula
Required return = ($2.30 / $39.85) + .045
Required return = .1027*100
Required return= 10.27%
Therefore Required return is 10.27%
Calculation for dividend yield using this formula
Dividend yield = D1 / P0
Let plug in the formula
Dividend yield = $2.30 / $39.85
Dividend yield = .0577*100
Dividend yield = 5.77%
Therefore Dividend yield is 5.77%
Calculation for the expected capital gains yield
Using this formula
Expected capital gains yield=Required return-Dividend yield
Let plug in the formula
Expected capital gains yield=10.27%-5.77%
Expected capital gains yield=4.5%
Therefore Expected capital gains yield is 4.5%
Answer:
$937,800
Explanation:
The adjusting entry would be
Salaries expense A/c $12,800
To Salaries payable A/c $12,800
(Being salary is adjusted)
The salaries expense is computed below:
= Total five days × number of days ÷ total number of days
= $32,000 × (2 ÷ 5)
= $12,800
Now the ending balance of salaries expense would be
= Unadjusting balance + adjusting balance
= $925,000 + $12,800
= $937,800
Answer:
The yield to call for this bond is 9.30%
Explanation:
Yield to call
The rate of return bondholders receives on a callable bond until the call date is called Yield to call.
Now use the following formula to calculate the Yield to call
Yield to Call = [ C + ( F - P ) / n ] / [ ( F + P ) / 2 ]
Where
F = Face value = $1,000 ( Assumed )
C = Coupon Payment = Face value x Coupon rate = $1,000 x 10.4% = $104
P = Call price of the bond = Face value + Call Premium = $1,000 + $75 = $1,075
n = Numbers of years to call = 10 years
Placing vlaues in the formula
Yield to Call = [ $104 + ( $1,000 - $1,075 ) / 10 years ] / [ ( $1,000 + $1,075 ) / 2 ]
Yield to Call = 0.0930
Yield to Call = 9.30%
