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Mariana [72]
3 years ago
6

Lopez Plastics Co. (LPC) issued callable bonds on January 1, 2021. LPC's accountant has projected the following amortization sch

edule from issuance until maturity:
Date Cash Effective Decrease in Outstanding
interest interest balance balance
1/1/2021 $207,020
6/30/2021 $7,000 $6,211 $789 206,230
12/31/2021 7,000 6,187 813 205,417
6/30/2022 7,000 6,163 837 204,580
12/31/2022 7,000 6,137 863 203,717
6/30/2023 7,000 6,112 888 202,829
12/31/2023 7,000 6,085 915 201,913
6/30/2024 7,000 6,057 943 200,971
12/31/2024 7,000 6,029 971 200,000
What is the annual stated interest rate on the bonds?
a. 3.5%
b. 6%
c. 7%
d. none of the above
Business
1 answer:
Kobotan [32]3 years ago
6 0

Answer:

c. 7%

Explanation:

According to the given scenario, the computation of the annual stated interest rate on the bonds is shown below:-

Sated interest Rate = Cash interest ÷ Face Value of the bond × 2

= $7,000÷ $200,000 × 2

= 7%

Therefore for computing the annual stated interest rate on the bonds we simply applied the above formula. hence the correct option is c

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Answer:

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Explanation:

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Overstatement of ending Inventory understate the value of cost of Goods sold and overstate the value of Net income and retained earning as well.

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4 0
3 years ago
The quantity theory of money holds that:______.
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Answer and Explanation:

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7 0
2 years ago
An investor purchases a 15-year, $1,000 par value bond that pays semiannual interest of $50. If the semiannual market rate of in
bearhunter [10]

Answer:

The answer is $862.35

Explanation:

Explanation:

This is a semiannual paying coupon, meaning interest are paid twice in year.

N(Number of periods) = 30periods ( 15 years x 2)

I/Y(Yield to maturity) = 6 percent

PV(present value or market price) = ?

PMT( coupon payment) = $50

FV( Future value or par value) = $1,000.

We are using a Financial calculator for this.

N= 30; I/Y = 6; PMT = 50; FV= $1,000; CPT PV= -862.35

Therefore, the market price of the bond is $862.35.

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3 years ago
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Increasing ,increasing
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