Answer:
The market price of this bond is: $1,069.8.
Explanation:
To calculate the market price of the bond, we have to use the following formula:
Bond Price= C*((1-(1+r)^-n)/r)+(F/(1+r)^n)
C= periodic coupon payments: $1,000*7%= $70
F= Face value: $1,000
r= Yield to maturity: 5.85%
n= No. of periods until maturity: 8 years
Bond Price= 70*((1-(1+0.0585)^-8)/0.0585)+(1,000/(1+0.0585)^8)
Bond Price= 70*((1-0.635)/0.0585)+(1,000/1.58)
Bond Price= 70*6.24+633
Bond Price= 436.8+633
Bond Price= 1,069.8
The spending that would occur during the third round of spending if the marginal propensity to consume (MPC) was 0.6 will be $420 billion.
- Increase in expenditure = $700 billion.
- Marginal propensity to consume = 0.6
The amount of spending based on the information given will be:
= 0.6 × $700 billion
= $420 billion.
Therefore, the correct option is $420 billion.
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Answer:
June 1 2020
No entry
September 1, 2020
Dr Cash $1,980
Dr Accounts receivable $300
Cr Sales revenue $1,730
Cr Unearned sales revenue $550
September 1, 2020
Dr Cost of goods sold $1,140
Cr Inventory $1,140
October 15 2020
Dr Cash $300
Dr Unearned service revenue $550
Cr Accounts receivable $300
Cr Service Revenue $550
Explanation:
Preparation of the journal entries for Geraths in 2020
June 1 2020
No entry
September 1, 2020
Dr Cash $1,980
Dr Accounts receivable $300
($1,730+$550+$1,980)
Cr Sales revenue $1,730
($1,980/$2,610*$2,280)
($1,980+$630=$2,610)
Cr Unearned sales revenue $550 ($630/$2,610*$2,280)
September 1, 2020
Dr Cost of goods sold $1,140
Cr Inventory $1,140
October 15 2020
Dr Cash $300
Dr Unearned service revenue $550
Cr Accounts receivable $300
Cr Service Revenue $550
Answer:
A. The debit to Interest Expense will be greater because the market rate is greater than the stated interest rate.
Explanation:
The effective interest rate is the market rate which is real rate of interest payment after incorporating the compounding effect. When the effective interest rate is greater than the stated the bond will sell at discount. The stated interest rate determines the amount of interest borrower will have to pay. The effective interest rate lead to higher returns than stated interest rate.
Answer:
$225,000
Explanation:
Federal corporate income tax (21% flat rate)
$1,000,000 x 21% = $210,000
Federal dividend tax (15%).
$100,000 x 15% = $15,000
Dividens are neither expenses nor deductible, so they do not reduce the amount of corporate taxable income. Therefore we must add up the two quantities.
$210,000 + $15,000 = $225,000
