Answer:
Young should report proceeds from the sale of bonds as equal to $864,884
Explanation:
The proceeds on the sale of bonds is equivalent to the present value of all the cash flows that are likely to accrue to an investor once the bond is bought. These cash-flows are the periodic coupon payments that are paid semi-annually and the par value of the bond that will be paid at the end of the 5 years.
During the 5 years, there are 10 equal periodic coupon payments that will be made. In each year, the total coupon paid will be
and this payment will be split into two equal payments equal to 
. This stream of cash-flows is an ordinary annuity
The periodic market rate is equal to 
The PV of the cashflows = PV of the coupon payments + PV of the par value of the bond
=$40,000*PV Annuity Factor for 10 periods at 4%+ 
Answer:
$3,925,000
Explanation:
Calculation to determine what The balance of the projected benefit obligation at December 31, 2021 is
Projected benefit obligation $3,500,000
Add Service cost $300,000
Add Interest cost $350,000
(3,500,000X.1)
Less Benefits paid ($225,000)
Projected benefit obligation at December 31, 2021 $3,925,000
Therefore The balance of the projected benefit obligation at December 31, 2021 is $3,925,000
Answer:good question. Wait for the answer
Explanation:
Answer: 6.51 billion dollars
Explanation:
From the question, we are informed that the annual net sales for a huge soft drink company were 5.6 billion dollars in 2012 and that sales were increasing at a continuous rate of 3.85% per year.
The annual net sales in 2016 will be:
= 5.6 billion × (1 + 3.85%)^4
= 5.6 billion × (1 + 0.0385)^4
= 5.6 billion × (1.0385)^4
= 5.6 billion × 1.1631
= 6.51 billion dollars
Answer: a. $30,000
b. $21,600; $14,000
c. $5,600
d. 40%
Explanation;
a. When the company is assumed to have no debt and pays its net income entirely as dividends then the Value of the firm's equity is;
= <em>Earnings after taxes / Cost of Equity</em>
Risk free interest rate will be used. The Earnings after taxes are used because taxes have to be taken out to find out the amount due to shareholders for the year.
= 2,500 ( 1 - 40%) / 5%
= 1,500/ 5%
= $30,000
b. If interest is paid then the Value of equity will be;
= <em>Earnings after interest and taxes / Cost of Equity</em>
= (2,500 - interest * ( 1 - tax) ) / Cost of Equity
= (2,500 - 700 * ( 1 - 40%) ) / 5%
= $21,600
Value of debt = Interest/cost of debt
=700/5%
= $14,000
c. The total value of the firm without Leverage has been shown to be $30,000.
The total value of the firm with leverage would be;
= <em>Value of Equity assuming debt + Value of Debt</em>
= 21,600 + 14,00
= $35,600
Difference;
= 35,600 - 30,000
=$5,600
d. Value of debt is $14,000
= (5,600/14,000) * 100%
= 40%
