1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Ksju [112]
3 years ago
6

"A company issues $20,000,000, 7.8%, 20-year bonds to yield 8% (market rate) on January 1, 2007. Interest is paid on June 30 and

December 31. The proceeds from the bonds are $19,604,145. Using effective-interest amortization, how much interest expense will be recognized in 2007
Business
1 answer:
Agata [3.3K]3 years ago
4 0

Answer:

Interest expense for the year : 1,530,505.41

Explanation:

In the effective method the interest expense si determinate by multiplying the market rate with the carrying value.

Then, the difference against the cash outlay and this interest expense will amortize the bond discount:

Period B Carrying Cash outlay Int. Exp.  Amort Carrying Value

1 19,604,145 800000 764561.66 35438.34 19,639,583

2 19,639,583 800000 765943.75 34056.25 19,673,640

<em><u>Total interest expense:</u></em>

764,561.66 + 765,943.75  = 1,530,505.41

Then 800,000 - 764,561.66 = 35,438.34 amortization

new carrying value 19,604,145 + 35,438.34 = 19,639,583

Last: 19,638,583 x 0.078/2 = 765943.75

We add up the interst expense:

<em><u>Total interest expense:</u></em>

764,561.66 + 765,943.75  = 1,530,505.41

You might be interested in
The operational design of an illicit drug business can be divided into four stages of production and distribution: cultivation,
vesna_86 [32]
Retail distribution

The illegal drug business or trade primarily consists of the cultivation, manufacture, distribution and sales of prohibited drugs.

Cultivation and manufacture involves planting and harvesting prohibited drugs from plant sources (e.g. opium or marijuana) and processing the plant raw materials to produce the final product. For synthetic drugs, manufacture entails securing (sometimes by importation) of the chemicals required for the production of a certain drug (e.g. methamphetamine). Importation of the raw materials or final products might also be necessary to meet the demands.

With the final product at hand, the next step is to distribute and sell the drugs -- wholesale or retail. Wholesale distribution and sales involve large amounts (in bulk) of the illegal drugs while retail involves smaller amounts.  
5 0
2 years ago
You bought one of Great White Shark Repellant Co.’s 5.8 percent coupon bonds one year ago for $1,030. These bonds make annual pa
defon

Answer:

total rate of return on the Bond = 9.40%

Explanation:

given data

coupon bonds  = 5.8%

bonds price =  $1,030

maturity time = 14 year

required return on the bonds = 5.1 percent

solution

we know here market price of the bond is Present Value of Coupon Payments + Present face Value  

so that face Valueof  bond = $1,000

and here annual Coupon Amount will be

annual coupon amount = $1000 × 5.80%

annual coupon amount = $58

and here Market Price of the Bond will be

Market Price of Bond = Present Value of Coupon Payments + Present face Value    ......................1

here Present Value of Coupon Payments  at PVIFA 5.10% and 14 Years

Present Value Annuity Inflow Factor (PVIFA) =  \frac{1-(1/(1+r)^t}{r}  ....2

Present Value Annuity Inflow Factor =  \frac{1-(1/(1+0.0510)^14}{0.0510}

Present Value Annuity Inflow Factor = 9.83566

and

Present Value Inflow Factor (PVIF) 5.10%, 14 Years= \frac{1}{(1+r)^t}   ...........3

Present Value Inflow Factor (PVIF) = \frac{1}{(1+0.0510)^14}

Present Value Inflow Factor = 0.49838

so

Market Price of Bond = ( $58 × 9.83566 ) + ( $1,000 × 0.49838 )

Market Price of Bond = $1,068.85

so total rate of return on the Bond will be

total rate of return on the Bond = [ { Annual Coupon Amount + ( Change in Bond Price ) } ÷ Current Price]  ...............4

total rate of return on the Bond = \frac{58+(1068.85-1030)}{1030}

total rate of return on the Bond = 9.40%

5 0
3 years ago
Under a flexible-price monetary approach to the exchange rate Group of answer choices when the domestic money supply falls, the
Anastaziya [24]

Answer:

when the domestic money supply falls, the price level would eventually fall, keeping the interest rate constant.

Explanation:

Price can be defined as the amount of money that is required to be paid by a buyer (customer) to a seller (producer) in order to acquire goods and services.

In sales and marketing, pricing of products is considered to be an essential element of a business firm's marketing mix because place, promotion and product largely depends on it.

The flexible-price monetary model was developed by Frenkel and Mussa in 1976 and it states that the prices of goods are flexible while the purchasing power parity (PPP) is always constant.

Under a flexible-price monetary approach to the exchange rate when the domestic money supply falls, the price level would eventually fall, keeping the interest rate constant.

6 0
2 years ago
What are the c’s of credit
Anit [1.1K]
The five C's of credit<span> is a system used by lenders to gauge the creditworthiness of potential borrowers. The system weighs five characteristics of the borrower and conditions of the loan, attempting to estimate the chance of default. The five </span>C's of credit<span> are character, capacity, capital, collateral and conditions.

please give me brainliest</span>
3 0
3 years ago
Ginny and Eric are partners at an architecture firm. They are trying to determine which of them has a comparative advantage in b
blondinia [14]

Answer: (i) $20 per model

(ii) $27 per model

(iii) Ginny has a comparative advantage in building models.

Explanation:

A country or a firm has a comparative advantage in producing a commodity if the opportunity cost of producing that commodity in terms of other commodities is lower than the other country or firm.

Opportunity cost is the benefit that is foregone for an individual by choosing one alternative over other alternatives available to him.

If the opportunity cost is lower for an individual then this will benefit him whereas if the opportunity cost is higher then this will not benefit the individuals.

Therefore,

Ginny's Opportunity cost of producing one model = \frac{400}{20}

                                                                                      = $20 per model

Eric’s opportunity cost of building models = $20 + 35% of $20

                                                                      = $20 + $7

                                                                      = $27 per model

Hence, Ginny has a comparative advantage in building models because Ginny's opportunity cost of building model is lower than Eric's opportunity cost.

5 0
2 years ago
Other questions:
  • Kramer and Knox began a partnership by investing $60,000 and $80,000, respectively. Assume that the partners agreed to share net
    8·1 answer
  • Which type of life policy contains a monthly mortality charge as well as self-directed investment choices? joint life adjustable
    6·1 answer
  • Sari, a movie theater manager, recently implemented a policy stating that workers who are willing to work a double shift on Frid
    15·2 answers
  • the is a multiple choice examination that evaluates the skills of the applicants for enlistment in the US military.
    6·1 answer
  • Paragon Leasing has been approached by Mid-America Trucking Company (MATC) to provide lease financing for a fleet of new tractor
    10·1 answer
  • Asking a job candidate his or her marital status is
    14·2 answers
  • ​________ is the second step in the target marketing process. in this​ step, marketers evaluate segments and decide which segmen
    5·1 answer
  • On December​ 31, 2014​, Renda​'s common stock sold for per share. At that​ price, how much did investors say​ $1 of the​ company
    12·1 answer
  • Jacob wants to invite 20 friends to his birthday, which will cost his parents $250. If he decides to invite 15 friends instead,
    14·1 answer
  • identify the characteristics of a successful workplace culture. select all that apply. employees want to do a good job. employee
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!