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likoan [24]
3 years ago
8

Casey is considering taking out a 30-year loan with monthly payments of $205 at an APR of 1.9%, compounded monthly, and this equ

ates to a loan of $56,220.01. Assuming that the APR and the length of the loan remain fixed, which of these is a correct statement?

Business
2 answers:
Sergio [31]3 years ago
4 0

So logically, without doing any math, you can look at the answers and see which is the correct answer.

So we are told that rate and term stay the same.

So if you make lower payments but make the same number of payments, the total amount of payments would be LESS than the original loan.

If you make higher payments, the amount of the loan would be MORE.

Look for the answer that meets this criteria.

Kipish [7]3 years ago
4 0

Answer:

A, monthly payments of $195

Explanation:

You might be interested in
Helmuth Inc's latest net income was $1,250,000, and it had 225,000 shares outstanding. The company wants to pay out 45% of its i
QveST [7]

Answer:

b. $2.50

Explanation:

Dividend paid = 45%*12,50,000

                        = $562500

dividend per share = 562500/225000

                                = $2.50

Therefore, The dividend per share should it declare is $2.50

4 0
3 years ago
Sayon Co. issues 200,000 shares of $5 par value common stock to acquire Trask Co. in an acquisitionbusinesscombination. The mark
enot [183]

Answer:

option (c) $1,365,000

Explanation:

Given;

Number of shares issued = 200,000

Par value of the common stock = $5

Market value of the common stocks= $12

Legal and consulting fees = $110,000

Registration and issuance costs for the common stock = $35,000

Now,

The par value of the stocks

= Number of shares issued × Par value of the stocks

on substituting the respective values, we have

= 200,000 × $5

= $1,000,000

and, the Market value of the stocks

= Number of shares issued × Market value of the stocks

on substituting the respective values, we have

= 200,000 × $12

= $2,400,000

Therefore,

the net additional paid in cash

= Market value of the stocks - par value of the stocks - Registration and issuance costs

on substituting the respective values, we have

= $2,400,000 - $1,000,000 - $35,000

= $1,365,000

The legal and the consulting fees is not included above because they are paid in cash.

Hence, the correct answer is option (c) $1,365,000

5 0
3 years ago
Cash interest is computed annually when a bond is issued for other than its face value. For a bond issued at a premium, how will
sergeinik [125]

Answer:

Under the effective interest method, as a bond approaches maturity, the interest expense decreases while the amortization of the bond premium increases.

Explanation:

E.g. a company issues $800,000 in 8% bonds when the market rate is 7%, so the bonds price is $856,850 (semiannual coupons are paid).

Journal entry to record the issuance

Dr Cash 856,850

    Cr Bonds payable 800,000

   Cr Premium on bonds payable 56,850

amortization of bond premium on first coupon payment:

($856,850 x 3.5%) - ($800,000 x 4%) = $29,989.75 - $32,000 = -$2,010.25 ≈ -$2,010

Journal entry to record first coupon payment:

Dr Interest expense 29,990

Dr Premium on bonds payable 2,010

    Cr Cash 32,000

amortization of bond premium on second coupon payment:

($854,840 x 3.5%) - ($800,000 x 4%) = $29,919.40 - $32,000 = -$2,080.60 ≈ -$2,081

Journal entry to record second coupon payment:

Dr Interest expense 29,919

Dr Premium on bonds payable 2,081

    Cr Cash 32,000

7 0
3 years ago
A corporate bond currently yields 8.5%. Municipal bonds with the same risk, maturity, and liquidity currently yield 5.5%. At wha
max2010maxim [7]

Answer: 35.29%

Explanation:

Municipal Bonds are attractive in that they give the tax benefit of being tax exempt whereas a corporate bond is liable for taxation. The tax rate that will therefore make an investor indifferent between the two bonds is the one that will equate the Corporate bond's yield net of tax to the yield on the Municipal bond.

5.5% = 8.5% * ( 1 - x)

5.5% = 8.5% - 0.085x

0.085x = 8.5% - 5.5%

0.085x = 3%

x = 35.29%

6 0
3 years ago
The Pritzker Music Pavilion in downtown Chicago is a technologically sophisticated and uniquely designed performing arts venue t
jonny [76]

Answer:

a. What is the estimated contribution margin per ticket sold for the benefit concert?

contribution margin per ticket = ($15.50 + $2 + $17) - ($6 + $2.55 + $7) = $34.50 - $15.55 = $18.95

b. What are the estimated total fixed costs for the benefit concert?

total fixed costs = $21,000 + $85,000 = $106,000

c. What is the estimated profit from the benefit concert if 10,500 tickets are sold?

estimated profit = (10,500 x $18.95) - $106,000 = $92,975

d. How many tickets must be sold in order for concert profit to be $100,000?

number of tickets sold = ($106,000 + $100,000) / $18.95 = 10,870.71 ≈ 10,871 tickets sold

e. Assuming a tax rate of 31% on profits from the concert, what must dollar ticket sales be in order for after-tax concert profits to be $100,000?

$100,000 / (1 - 31%) = $144,927.54

number of tickets sold = ($106,000 + $144,927.54) / $18.95 = 13,241.56 ≈ 13,241.56 tickets sold

f. Assume that the organizers can negotiate the fixed payment for the pavilion's operating expenses. If the organizers expect to sell 10,500 tickets, how much can they afford to pay and still earn a profit of $100,000 (ignore taxes)?

contribution margin increases to $18.95 + $7 = $25.95

10,500 = ($21,000 + $100,000 + ?) / $25.95

$272,475 = $121,000 + ?

? = $151,475

you can pay up to $151,475 in fixed expenses to the pavilion

5 0
3 years ago
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