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pantera1 [17]
3 years ago
14

Your firm will issue 10-year bonds to raise $10 million. You will either (a) issue regular coupon bonds which have a 6% coupon r

ate and make annual payments or (b) issue zero coupon bonds which make annual payments. Both options will have a YTM of 8%. What is your firm’s total repayment 10 years from now if they went with option (b)?
Business
1 answer:
kogti [31]3 years ago
5 0

Answer:

10000000*〖(1+0,08)〗^10 = 21589249

Explanation:

The formula to get the principal of a future value is this one, but if there are monthly or yearly payments we need the interest rate of those payments, as the b) option does not have coupon this is the formula.

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All of the following are reasons to use an estimated method of costing inventory except: A. perpetual inventory records are not
morpeh [17]

Answer:

The answer is: B) purchase records are not maintained.

Explanation:

There are two methods for estimating inventory costs:

  1. Gross Profit Method : uses the information from the income statement. If operating conditions remain similar, the proportion between total sales, profits and COGS should be similar (lets say profit is 30% and COGS is 70% of total sales). You can estimate your inventory costs by using the information on total sales.  
  2. Retail Method: It is used mostly by merchandising firms (retailers) that have consistent mark-ups. You have to determine the proportion between cost and retail price (lets say the COGS is 80% of the retail price). Then if you are given the retail inventory, you can determine the COGS using the proportion determined previously.

8 0
3 years ago
Crane Company has 900 shares of 4%, $100 par cumulative preferred stock outstanding at December 31, 2018. No dividends have been
labwork [276]

Answer:

c) $7200

Explanation:

Preference dividends have preference when it comes to payment of dividends.

This means that we pay the Preference Stock holders their dividend (which is fixed) and there after the remainder is paid up to the Common Stockholders

Preference dividend = 900 shares x $100 x 4 % =  $3600

When Preference Stock is Cumulative, it means that all previous dividends in arrears have to be paid up before any current year distributions are made.

<u>2018</u>

Cumulative Preference dividend = $3600 (2017) + $3600 (2018) = $7200

therefore,

Dividends in arrears at December 31, 2018 total $7200

8 0
3 years ago
Digger Inc. sells a high-speed retrieval system for mining information. It provides the following information for the year.
kozerog [31]

Answer:

Predetermined overhead rate=$19.5/machine hour

The company applied  $877500 to the units produced.

Explanation:

a) Pre-determined overhead rate= <u>Budgeted overhead manufacturing cost</u>

                                                         Estimated number of machine hours

                                                    =975000/50000=$19.5/machine hour.

b)Applied overhead = Pre-determined overhead rate * Actual machine hours

                               = 19.5 * 45000

                              =$877500.

c.

In traditional costing we use as base for calculating overhead rate is machine hours or labor hours but in activity based costing we identify activity that consume resources,identify cost driver of each activity,compute cost rate per cost driver unit and finally assign cost to products by multiplying cost driver rate.

Predetermined overhead rate= estimated overhead/Estimated base (cost driver).

7 0
3 years ago
If the coupon interest rate remains constant from the time of issue until the bond matures, then the bond is called afixed-rate
marta [7]

Answer:

Indenture

Deferred call provision

Explanation:

Indenture is defined as the contract that describes the terms of a borrowing arrangement between a firm that sells a bond issue and the investors who purchase the bonds.

A call provision is defined as the right that the issuer of a security has to call or redeem the security at certain times and under specific conditions.

The call provision in which the issuer is prevented from calling a portion or the entire issue for several years during the early years of the bond issue is called deferred call provision.

8 0
3 years ago
On January 1, 2019, Metco Inc. reported 268,000 shares of $5 par value common stock as being issued and outstanding. On March 24
elena55 [62]

Answer:

The number of shares of stock issued in the stock dividend is 5,312.20 shares.

Explanation:

This can be determined as follows:

Number of shares before stock dividend = Number of shares reported on January 1, 2019 - Number of shares purchased for its treasury on March 24, 2019 + Number of treasury shares were sold on August 19, 2019 = 268,000 - 3,000 + 610 = 265,610

Number of dividend shares = Number of shares before stock dividend * Rate of stock dividend issued = 265,610 * 2% = 5,312.20

Therefore, the number of shares of stock issued in the stock dividend is 5,312.20 shares.

7 0
2 years ago
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