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Elenna [48]
3 years ago
7

To help finance a major expansion, Top Fashion Company sold a noncallable bond several years ago that now has 20 years to maturi

ty. This bond has a 8.0% annual coupon, paid semiannually, sells at a price of $1,050, and has a par value of $1,000. If the firm's tax rate is 40%, what is the component cost of debt for use in the WACC calculation? 4.51% 4.68% 3.95% 5.24% 4.80%
Business
1 answer:
Basile [38]3 years ago
3 0

Answer:

4.51%

Explanation:

First, find the yield to maturity(YTM) of the bond; this would be the pretax cost of debt.

Using a financial calculator, input the following;

Face value of the bond ; FV = 1000

Semiannual coupon payment; PMT = (8%/2)*1000 = 40

Present value of bond; PV = -1050

Time to maturity; N = 20*2 = 40 semiannual payments

then compute semi-annual interest rate ; CPT I/Y = 3.756%

The pretax cost of debt = 3.756% *2 = 7.51%

After tax-cost of debt is used for WACC calculation and is therefore as follows;

7.51%(1-0.40) = 4.51%

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Air France collected cash on February 4 from the sale of a ticket to a customer on January 26. The flight took place on April 5.
expeople1 [14]

Answer:

Air France should have recognized the Revenue in month of  APRIL.

Explanation:

According to the revenue recognition concept the revenue should be recognized when it is realizable. When goods or services are tranferred or rendered to the customer. It doesn't matter matter when the payment is received. Payment received in advance should be recorded as unearned revenue rather as revenue. On the other hand payment doesn't received until the transfer of goods or services, a receivable will be made in result of revenue recognition entry. Air France should recognize the revenue on April 5, when the flight took placed and services are performed. Sale of ticked on January 26 will be recorded as unearned revenue and a receivable on the other hand. The receivable will be adjusted on February 4 when cash is received and the revenue will be recognized on April 5 when flight took place.

7 0
3 years ago
Thousands of developers, lenders, and investors were victims of deflation in commercial real estate beginning in the:?
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Thousands of developers, lenders, and investors were victims of deflation in commercial real estate beginning in the 1980s and in 2007-2009.

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7 0
1 year ago
Cheese makers in Wisconsin sell their leftover brine to local city and county highway​ departments, which use it in conjunction
alexdok [17]

Answer:

A) By product pricing

Explanation:

If you are able to sell your companies by products it is a great way to make more money and to reduce costs. Imagine if the cheese factories needed to throw away all that brine. They would need to develop some waste disposal facility which obviously costs money to build and operate. Instead they are lowering their costs by selling it and at the same time are getting more money. They would probably even give it away for free if no one was willing to pay for it.

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2.1: A debit is A : a decrease to an account. B : an entry on the left side of an account. C : an entry on the right side of an
Luba_88 [7]

Answer:

B : an entry on the left side of an account.

Explanation:

There are two terms i.e debit and credit.  

The accounts that reported as an expense, losses, assets are recorded in the left-hand side of an account as it contains the debit balance.

While the account reported as a revenue, gains, liabilities & stockholder equity are recorded in the right-hand side of an account as it contains the credit balance.

7 0
3 years ago
Buyers Sam and Linda Pope are entering into a contract with sellers, Jim and Alana Jones in which part of the sale price of the
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Answer:

d) Installment sales contract

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A contract is described as an agreement between two or more parties commits to undertakes specific obligations.  In a sale contract, the buyer and seller agree to the exchange or foods or services for a consideration called price.

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