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3 years ago

Companies that have higher risk than a competitor in the same industry will generally have

Business

2 answers:

Drupady [299]3 years ago

4 0

Answer:

if one companies are at high risk than other in peer-group then that company has to do following:

1) reliable to submit an interest rate more than a competitor having a low risk

2)rate of relative stock should be less than the competitor having a low risk

3) cost of funds should be of high amount than competitor having a low risk

Explanation:

In a peer groups, companies that share the same business and are in competition with each other are added. if one companies are at high risk than other in peer-group then that company has to do following:

1) reliable to submit an interest rate more than a competitor having a low risk

2)rate of relative stock should be less than the competitor having a low risk

3) cost of funds should be of high amount than competitor having a low risk

OverLord2011 [107]3 years ago

3 0

To pay a higher interest rate, a lower relative stock price, and a higher cost of funds than its competitors

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Answer:

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Explanation:

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3 years ago

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3 years ago

g On the first day of its fiscal year, Chin Company issued $10,000,000 of five-year, 7% bonds to finance its operations of produ

Elis [28]

Answer and Explanation:

According to the scenario, computation of the given data are as follow:-

Total Years = 5, semiannually = 5 × 2 = 10

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Journal Entries

On Jan 1

Cash A/c Dr. $9,594,415

Discount on bonds payable A/c Dr. $405,585

To Bonds payable A/c $10,000,000

(Being the issuance of bond payable is recorded)

Discount value of issued bonds = $10,000,000 - $9,594,415 = $405,585

2).

On Jun

Interest expenses A/c Dr. $390,559

Discount on bonds payable A/c($405,585 ÷10) Dr.40,559

To Cash A/c($10,000,0000 × 3.5%) $350,000

(Being the payment of first semiannual interest is recorded)

3).

On Dec 31

Interest expenses A/c Dr. $390,559

Discount on bonds payable A/c($405,585*10/100) Dr.$40,559

To Cash A/c($10,000,000*3.5/100) $350,000

(Being the payment of second semiannual interest is recorded)

b). Bond Interest Expense Amount for First Year

= Interest Expenses + Amortized Discount

= $700,000 + $81,117

= $781,117

Interest expenses = $350,000 + $350,000 = $700,000

Amortized Discount = $40,559 + $40,559 = $81,117

c).The Company issued the bonds at $9,594,415 for the face amount of $10,000,000 because bonds issued at discount for $405,585 as the coupon rate is less than the market interest.

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