Boone Company purchased a piece of machinery by paying $18,000 cash. In addition to the purchase price, the company incurred $80
1 answer:
Answer:
The correct answer is $18920.
Explanation:
Boone Company purchased a piece of machinery by paying $18,000 cash.
In addition to the purchase price, the company incurred $800 freight charges.
Estimated useful life of the machine is 5 years and will require $600 for insurance over that period.
So insurance money for a year = $ ( ) = $120.
Boone Company would record the cost of the machine at $ ( 18000+ 800+ 120) = $ 18920.
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Answer:
YTM = 8%
Explanation:
$100 per year up to 4 years means, each year, the FV = $100.
We know, Zero coupon bond = [Fair Value ÷ ]
As the 4-year annuity paying the different YTM in the previous three years, 4th year YTM will be -
Bond value = +
+
+
or, $334.57 = $94.3396 + $87.3439 + $79.3832 +
or, $334.57 - 261.0667 =
or, = ($100 ÷ $73.50)
or, 1 + YTM =
or, YTM = 1.08 - 1
YTM = 0.08 or 8%
Answer:
The current dollar price assuming a par value of $1,000 is $ 1,213.95
Explanation:
The current price is computed as shown below:
The coupon payments will be as follows:
= (7.3% ÷ 2) × $ 1,000 (Since the payments are semi annual, hence divided by 2)
= $ 36.5
YTM will be as follows:
= (5.3% ÷ 2) (Since the payments are semi annual, hence divided by 2)
= 2.65%
N is computed as follows:
= (17 - 1 ) × 2 (Since the payments are semi annual, hence multiplied by 2)
= 32
So, the price of the bond will be as follows:
= Coupon payment x [ ] +
= $ 36.5 × [ ( 1 - ] / 0.0265 ] +
= $ 36.5 × 21.39526 + $ 433.0255
= $ 780.92699 + $ 433.0255
= $ 1,213.95