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stepan [7]
3 years ago
9

Sylvester Co. takes out a 12% loan of $500,000 on 1/1/2014 to finance construction of a building for the company’s own use. Cons

truction begins immediately, and $600,000 is spent on the construction at an even pace during 2014. Another $400,000 is spent at an even pace during 2015, with construction completed on 12/31/2015. No other construction loans are taken out. Sylvester incurred unrelated interest expenses of $10,000 and $15,000 in 2014 and 2015, respectively, on loans that bear interest at 10%. How much interest can Sylvester capitalize in 2014 and 2015?
Business
1 answer:
IRINA_888 [86]3 years ago
7 0

Answer:

2014 36,000

205: 24,000

Explanation:

500,000 x 12% = 60,000 construction realted per year

Capitalize:

timeline:

<--/--/--/--/--/--/--/--/--/--/--/--/-->

each month the company is doing an spending related to the construction. We must capitalize based on the amount investment.

The first month capitalize throught the whole year,

the second month 11 months

the third for 10 months and so on.

Therefore, the capitalize amount will be half of the cost of the year

2014: interest capitalized through the cost of construction

600,000/2 x 12% = 36,000

400,000/2 x 12% = 24,000

That's the maximum amount we can capitalize for construction.

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Find an equation of the line slope 2/3; through (-6,3)
Minchanka [31]
If you are given a point and the slope, use the point-slope formula.
m = 2/3
(x₁, y₁) = (-6, 3)

y - y₁ = m(x - x₁)

y - 3 = 2/3(x + 6)
y - 3 = 2/3x + 12/3
y - 3 = 2/3x + 4
y = 2/3x + 1

The equation of the line is y = 2/3x + 1.

4 0
3 years ago
LMN Insurance Company is concerned about its exposure to hurricane losses for property risks it insured on the Gulf Coast. LMN b
ELEN [110]

Answer:

c) Catastrophe Bonds

Explanation:

These type of bonds are also known as the CAT bonds, and they are issued  at any catastrophic event which is foreseen in the future. Basically these are insured linked securities that are used in the process of managing risks that are associated with the catastrophic events such as mentioned in the question i.e hurricane.

Any investor before investing in these bonds should fully understand what type of bonds are these because they posses a greater risk of low return and are very different from conventional bonds.

Hope this helps.

Thanks buddy.

3 0
3 years ago
On September 30, Silver Corporation, a calendar year taxpayer, sold a parcel of land (basis of $400,000) for a $1 million note.
nadya68 [22]

Answer:

Sam must report $700,000 distribution from Silver on his Income report.

Explanation:

The sale of the land is made by the corporation and the corporation is a tax payer therefore any gains and losses are for the company to pay tax on.

The deficits in the E&P are for Silver to take into account when about to pay taxes.

The basis of $200,000 is not income but cost and subtracted on the distribution income as is for Sam.

6 0
3 years ago
Select all the reasons to keep your money in a financial institution.
mr_godi [17]
All of them :) All those reasons.

5 0
2 years ago
Read 2 more answers
offers a 6.3 percent bond with a current market price of $767.50. The yield to maturity is 8.49 percent. The face value is $1,00
musickatia [10]

Answer:

9.25 years

Explanation:

Price of the bond is the present value of all cash flows of the bond. These cash flows include the coupon payment and the maturity payment of the bond. Price of the bond is calculated by following formula:

According to given data

Assuming the Face value of the bond is $1,000

Coupon payment = C = $1,000 x 6.3 = $63 annually = $31.5 semiannually

Current Yield = r = 8.49% / 2  = 4.245% semiannually

Market value = $767.50

Market Value of the Bond = $31.5 x [ ( 1 - ( 1 + 4.425% )^-n ) / 4.425% ] + [ $1,000 / ( 1 + 4.425% )^n ]

Market Value of the Bond = $31.5 x [ ( 1 - ( 1 + 4.425% )^-n ) / 4.425% ] + [ $1,000 / ( 1 + 4.425% )^n ]

n = 18.53 / 2

n = 9.25 years

7 0
3 years ago
Read 2 more answers
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