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yKpoI14uk [10]
3 years ago
8

Lance Whittingham IV specializes in buying deep discount bonds. These represent bonds that are trading at well below par value.

He has his eye on a bond issued by the Leisure Time Corporation. The $1,000 par value bond pays 6 percent annual interest and has 15 years remaining to maturity. The current yield to maturity on similar bonds is 14 percent. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. What is the current price of the bonds?

Business
1 answer:
Marianna [84]3 years ago
3 0

Answer:

$508.63

Explanation:

For this question, we use the Present value formula that is reflected in the attached spreadsheet. Kindly find it below:

Provided that

Given that,  

Future value = $1,000

Rate of interest = 14%

NPER = 15 years

PMT = $1,000 × 6% = $60

The formula is shown below:

= -PV(Rate;NPER;PMT;FV;type)

So, after solving this, the present value is $508.63

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Logistics Company had the following items listed in its trial balance at 12/31/2018: Balance in checking account, Bank of the Ea
Elena L [17]

Answer: $352,000

Explanation:

The information needed to calculate the cash and cash equivalent are:

Balance in checking account, Bank of the East = $ 382,000

The restricted cash included in the checking account = $49,000

Treasury bills = $19,000

We subtract the restricted cash from the balance in the checking account and then add it to the treasury bills. This will be:

= ($382,000 - $49,000) + $19,000

= $333,000 + $19,000

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4 0
3 years ago
The following section is taken from Blossom's balance sheet at December 31, 2021. Current liabilities Interest payable $ 40,500
aev [14]

Answer:

(a) Journalize the payment of the bond interest on January 1, 2022.

Dr Interest payable - bonds payable 40,400

    Cr Cash 40,400

The interest expense on the bonds payable should have been accrued on the 2021 balance sheet, that is why we debit interest payable and not interest expense.

(b) Assume that on January 1, 2022, after paying interest, Blossom calls bonds having a face value of $100,000. The call price is 103. Record the redemption of the bonds.

Dr Bonds payable 100,000

Dr Call premium 3,000

    Cr Cash 103,000

(c) Prepare the adjusting entry on December 31, 2022, to accrue the interest on the remaining bonds.

interest expense = $405,000 x 8% = $32,400

Dr Interest expense - bonds payable 32,400

    Cr Interest payable - bonds payable 32,400

3 0
3 years ago
A firm is productively efficient when:__________.
inna [77]

Answer:

Its is A

Explanation:

7 0
3 years ago
Which group can receive millions in dollars in revenue from stadium parking?
qaws [65]
<span>The process of developing, promoting, and distributing products?</span>
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Mary trades in that involves buying and selling of stocks and mutual funds. She is a major shareholder and the CEO of a large co
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ExplanatMary trades in <em><u>paper assets</u></em> that involves buying and selling of stocks and mutual funds. She is a major shareholder and the CEO of a large corporation. She needs capital to expand the company. Mary can raise capital by issuing <em><u>bonds</u></em>. This will assure lenders that Mary’s company will repay the loan.

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