A firm has $600,000 in current assets and $150,000 in current liabilities. Which of the following is correct if it uses cash to
1 answer:
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Answer:
$200,000 ; $234,120.81 ; and $185,279.83
Explanation:
For computing the issue price we need to applied the future value which is shown in the attachment below:
a. Given that,
Future value = $200,000
Rate of interest = 10% ÷ 2 = 5%
NPER = 5 years × 2 = 10 years
PMT = $200,000 × 10% ÷ 2 = $10,000
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, applying the formula the issued price is $200,000
b. Given that,
Future value = $200,000
Rate of interest = 6% ÷ 2 = 3%
NPER = 5 years × 2 = 10 years
PMT = $200,000 × 10% ÷ 2 = $10,000
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, applying the formula the issued price is $234,120.81
c. Given that,
Future value = $200,000
Rate of interest = 12% ÷ 2 = 6%
NPER = 5 years × 2 = 10 years
PMT = $200,000 × 10% ÷ 2 = $10,000
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, applying the formula the issued price is $185,279.83
