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lakkis [162]
3 years ago
7

26. Currently, Bruner Inc.'s bonds sell for $1,250. They pay a $120 annual coupon, have a 15-year maturity, and a $1,000 par val

ue, but they can be called in 5 years at $1,050. Assume that no costs other than the call premium would be incurred to call and refund the bonds, and also assume that the yield curve is horizontal, with rates expected to remain at current levels on into the future. What is the difference between this bond's YTM and its YTC

Business
1 answer:
maksim [4K]3 years ago
7 0

Answer:

2.11%

Explanation:

From the information given; we use the Excel spreadsheet to compute the  difference between this bond's YTM(Yield to maturity) and its YTC(Yield to call).

From the diagram; we will see that the

YTM(Yield to maturity) = 8.91%

YTC(Yield to call).= 6.81%

Therefore the difference between this bond's YTM and its YTC = (8.91 - 6.81)%

the difference between this bond's YTM and its YTC = 2.11%

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On December 31, 2020, Blossom Inc. has a machine with a book value of $1,034,000. The original cost and related accumulated depr
dangina [55]

Answer:

A)

Loss on Fire          280,720 debit

Acc depreciation 506,000 debit

Cash                     643,280 debit

      Equipment                     1,430,000 credit

B)

Acc depreciation 526,000 debit

Cash                   1,555,480 debit

      Equipment                     1,430,000 credit

     Gain at disposal                608,480 credit

C)

charitable contribution     1,645,600 debit

accumulated depreciation 500,500 debit

       equipment                                1,430,000 credit

       gain on disposal                          716,100  credit

<u>Questions</u>

A Fire completely destroys the machine on August 31, 2021. An insurance settlement of $643,280 was received for this casualty. Assume the settlement was received immediately.

B On April 1, 2021, Tritt sold the machine for $1,555,840 to Dwight Yoakam Company.

C On July 31, 2021, the company donated this machine to the Mountain King City Council. The fair value of the machine at the time of the donation was estimated to be $1,645,600.

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In all cases, the company will write-off the equipment and acc depreciation

A.-

complete depreciation for 2020: 66,000

depreciation until August 31th: 66,000 x 8/12 = 44,000

Total depreciation 104,000

book value 1,034,000 - 104,000 = 924,000

loss: 924,000 - 643,280 = 280,72‬0

b)

complete depreciation for 2020:                   66,000

depreciation until April 31th: 66,000 x 4/12 = 22,000

Total depreciation     88,000

book value 1,034,000 - 88,000 = 946,000

1,555,480 - 946,000  = 608,480

c)

complete depreciation for 2020:                  66,000

depreciation until July 31th: 66,000 x 7/12 = 38,500

Total depreciation                                          104,500

book value 1,034,000 - 104,500 =   929,500

gain: 1,645,600 - 929,500 = 716.100

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B is the answer

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