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3 years ago

How does a bond issuer decide on the appropriate coupon rate to set on its bonds?

Business

1 answer:

Novay_Z [31]3 years ago

4 0

Answer

The answer and procedures of the exercise are attached in the following image.

Explanation

Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.

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Harrison Forklift's pension expense includes a service cost of $26 million. Harrison began the year with a pension liability of

Svetlanka [38]

Answer:

1. ($ in millions)

Dr Pension expense $19

Dr Plan assets (expected return on assets) $20

Cr PBO$33

Cr Net loss—AOCI(current amortization) $6

2. ($ in millions)

Dr Pension expense $26

Dr Plan assets (expected return on assets) $16

Dr Net gain—AOCI(current amortization) $6

Cr PBO $48

3. ($ in millions)

Dr Pension expense $45

Dr Plan assets (expected return on assets) $16

Cr PBO $48

Cr Net loss—AOCI(current amortization) $6

Cr Prior service cost (current Amortization) $7

Explanation:

Preparation of the appropriate general journal entries to record Harrison's pension expense

1. ($ in millions)

Dr Pension expense $19

($33+$6-$20)

Dr Plan assets (expected return on assets) $20

Cr PBO($26 service cost + $7 interest cost) $33

Cr Net loss—AOCI(current amortization) $6

2. ($ in millions)

Dr Pension expense $26

($48-$16-$6)

Dr Plan assets (expected return on assets) $16

Dr Net gain—AOCI(current amortization) $6

Cr PBO($26 service cost + $22 interest cost) $48

3. ($ in millions)

Dr Pension expense $45

($48+$6+$7-$16)

Dr Plan assets (expected return on assets) $16

Cr PBO($26 service cost + $22 interest cost) $48

Cr Net loss—AOCI(current amortization) $6

Cr Prior service cost (current Amortization) $7

5 0

3 years ago

Will U.S. policy makers let themselves be spooked by financial phantoms and bullied by business intimidation?

Nesterboy [21]

That’s a great question but a hard answer to give

5 0

4 years ago

Which view allows viewer to change slides to grayscale

Gnom [1K]

Answer:

•color view

•slide show view

•protected view

Explanation:

8 0

3 years ago

The Law of Demand is a rule stating that more will be demanded at lower prices and less at higher prices; inverse relationship b

guajiro [1.7K]

Answer:

True

Explanation:

The variables price and quantity are inverse correlated then a change in 1 has the exact opposite effect in the other.

6 0

3 years ago

Next week, super discount airlines has a flight from new york to los angeles that will be booked to capacity. the airline knows

Setler79 [48]

The cost of underestimating the demand is considered a revenue loss that arises due to cancellation of flight costing $134. Hence, cost of underetimating the demand is $C_u=\$134$ .

The cost of overestimating the demand is known as rewards. For example, free round trip ticket worth $263. Hence, the cost of overestimating the demand is $C_o=\$263$ .

$\frac{C_u}{C_u+C_o} = \frac{134}{134+263} \\ \\ = \frac{134}{397} =0.3375$

The z-score that yields a p-value of 0.3375 is -0.4193.

Thus, super discount airlines should overbook the flight by 35 + (-0.4193 x 24) = 35 - 10.0632 = 24.9368 = 25 seats.

Therefore, super discount airlines should overbook the flight by 25 seats.

4 0

3 years ago