A third-grade class spends several weeks learning how to solve story problems (e.g., a girl buys three candy bars for 66 cents a
1 answer:
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Answer:
Interest Expense $6,446,360
Interest Payable $7,000,000
Explanation:
Interest Expense for the year =
Issued amount * Effective interest rate *
$644,636,000 * 0.06 * 2/12 = $6,446,360
Interest Payable =
Face Value of the bond * Interest rate *
$600,000,000 * 0.07 * 2/12 = 7,000,000
Answer:
a. Product X = 3.50 years
Product Y = 3.25 years
b. Product Y
Explanation:
The cash flows for the two products as well as the balance at the end of each year is given as follows:
For both products, the payback period is reached between the third and fourth year.
Product X:
Product Y:
Under the payback method, the alternative that presents the shortest payback period should be selected. Therefore, Product Y should be selected.