Securities are ________ for the person who buys them, but are ________ for the individual or firm that issues them.

On January 1, 2019, East Lansing, Inc., issues $2,000,000 of 10 percent, 5-year bonds that pay interest of $100,000 semiannually

xenn [34]

Answer:

The issue price of the bond is the present value of the future cash flows of the bond,which is $2,162,217.92.

The calculation of the issue price is shown below.

Explanation

The bond will pay interest of $100000 for 10 periods plus $2000000 par at the end of the tenth period.

The formula applicable is: Future value of each period multiplied by applicable discounting factor.

Even though the bond is issued for only 5 years,but the fact that it pays interest semi-annually makes it 10 period duration(5years*2).

Interest rate should also be adjusted to show the time horizon of six month each by dividing 8% per year by 2.

The detailed computation of present value is as follows:

Periods Coupon Interest @10%/2 DCF=1/(1+r)^n PV

1.00 100,000.00 0.9615 96,153.85

2.00 100,000.00 0.9246 92,455.62

3.00 100,000.00 0.8890 88,899.64

4.00 100,000.00 0.8548 85,480.42

5.00 100,000.00 0.8219 82,192.71

6.00 100,000.00 0.7903 79,031.45

7.00 100,000.00 0.7599 75,991.78

8.00 100,000.00 0.7307 73,069.02

9.00 100,000.00 0.7026 70,258.67

10.00 2,100,000.00 0.6756 <u>1,418,684.75</u>

7 0

3 years ago

Differences between a job order cost system and a process cost system include all of the following except the

Alex Ar [27]

Answer:

a. flow of costs.

Explanation:

job order costing system is used mainy by companies that make small quantities of distinct products or performs unique services that sticks to specifications as design by the purchaser.

5 0

3 years ago

What factors make tax rules so complicated?

Alik [6]

Answer:

Hello!!! erz here ^^

Explanation:

Almost everyone agrees that the current tax system is too complicated, yet almost every year the system gets more complex, not less. Why? Tax simplicity almost always conflicts with other policy goals.

For example, the simplest—and least distorting—tax is a head tax, a fixed-dollar tax on everyone. But a head tax would be unfair, taking no account of differences in the incomes and needs of individuals, families, and businesses.

Most people believe taxes should be fair, conducive to economic prosperity, and enforceable, as well as simple. But even people who agree on these goals often disagree about the relative importance of each. As a result, policies usually represent a balance among competing goals, and simplicity often loses out to other priorities.

For example, most countries tailor tax burdens to individual taxpayers’ characteristics. That can make taxes fairer, but more complex. Income has to be traced from businesses to individuals. Individual characteristics such as marital status and number of dependents, as well as the composition of expenditures or income, have to be reported and documented. These conflicting objectives appear to be especially relevant in the current tax code, where the desire to reduce tax burdens for particular groups have added significant complexity.

Politics compounds the complexity. Interest groups—and thus politicians—support tax subsidies for particular activities. And these targeted subsidies inevitably complicate the tax system by creating distinctions among taxpayers with different sources and uses of income.

The current tax law was not enacted all at once but is a result of numerous provisions added or subtracted in multiple tax bills. Often Congress designs legislation under self-imposed constraints, such as short-term revenue goals or effects on the distribution of tax burdens among income groups. The result is that tax incentives are often designed in complex ways to limit the revenue losses or benefits to high-income taxpayers or to prevent their use by unintended beneficiaries.

Annual reports by the National Taxpayer Advocate have presented proposals for simplifying the tax code, including reforms of education incentives, retirement incentives, child benefits, and the alternative minimum tax.

8 0

3 years ago

Which of the following countries is the world's leading exporter of cacao beans?

const2013 [10]

The country that is the world's leading exporter of cacao beans is Cote d'lvoire. Since the 60's, the production of these beans has increased to 3.6 million tonnes. The 2nd highest country that is an exporter of cacao beans is Ghana. The correct answer is A.

8 0

3 years ago

A go-between who receives stolen goods for resale is called a

hoa [83]

It is known as a fence

5 0

3 years ago