Jessica Salas, president of Salas Products, is reviewing the warranty policy for her company's new model of automobile batteries
1 answer:
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Answer:
correct option is a. $617,911
Explanation:
given data
issued = $600,000
rate = 10 %
time 5 year
amount = $648,666
effective-interest rate = 7%
solution
we get here carrying value so first we get here Interest paid per semiannual period that is
Interest paid per semiannual period = $600000 ×10% ×
Interest paid per semiannual period = $30000
and
Interest expense on 30 June = $648666 × 7% ×
Interest expense on 30 June = $22703
and
Interest expense on 30 December = $641369 × 7% ×
Interest expense on 30 December = $22448
so
Interest expense on 30 June = ($641369 - $7552) × 7% ×
Interest expense on 30 June = $22184
and
Interest expense on 30 December = ($633817 - $7816) × 7% ×
Interest expense on 30 December = $21910
so as that we get Carrying value of 1st January that is
Carrying value of January 1 = $633817 - $7816-8090
Carrying value of January 1 = 617911
so correct option is a. $617,911