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Flauer [41]
3 years ago
6

Lacey owns a bakery in Dallas. She read online that the homeland security threat level has been increased due to anticipated ter

rorist activities, especially in large cities in the U.S. She will likely not be able to get insurance to cover any losses her business may suffer should an attack occur in Dallas.\
Business
1 answer:
Nostrana [21]3 years ago
6 0

Answer:

True

Explanation:

In the given statement, it was stated that there was a briefing online about the possibility of terrorist activities. She read the news and understood its meaning.  The insurance company is also aware of the news online. Therefore, the insurance company will not take any responsibility for the losses that might occur while she opens her shop.

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On January 1, a company issues bonds dated January 1 with a par value of $730,000. The bonds mature in 3 years. The contract rat
quester [9]

Answer:

a. Debit interest expense $38,500; credit discount on bonds payable $2,000; credit cash $36,500

Explanation:

As the bonds are sold less than the face vaue then it is said the bonds are issued on discount, we need to calculate the discount on the bond

Discount on the bond = Face value of bond - Issuance value of bond = $730,000 - $718,000 = $12,000

The discount will be amortized over the life of the bond

The first interest and its amortization is as follow

Cash Payment = Face value x Coupon rate x Semiannual fraction = $730,000 x 10% x 6/12 = $36,500

Amortization of discount on bond = Discount on Bond / Total Numbers of periods = $12,000 / ( 3 years x 2 payment period per year ) = $2,000 per eperiod

The cash will be credited by $36,500

The bond liability will be credited by $2,000

Hence the interest exepense will be debited by $38,500 ( $36,500 + $2,000 )

6 0
3 years ago
!!PLEASE HELP ME WITH MULTIPLE CHOICE!!
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3 years ago
Read 2 more answers
Rules that prevent the creation and behavior of are called antitrust laws.
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To prevent monopolies. The law was also created to make competition in the market place.
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Perit Industries has $135,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternat
Juli2301 [7.4K]

Answer:

1. Net present value of Project A = -41,449.96

2. Net present value of Project B = $143,746.85

3. I would recommend that company accept Project B.

Explanation:

Note: This question is not complete as the requirement are omitted. The requirements are therefore provided to complete the question before answering it as follows:

Perit Industries has $135,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are:

                                                                       Project A           Project B

Cost of equipment required                         $ 135,000                $ 0

Working capital investment required                 $ 0               $ 135,000

Annual cash inflows                                       $ 25,000           $ 63,000

Salvage value of equipment in six years        $ 9,800                $ 0

Life of the project 6 years 6 years

The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries’ discount rate is 17%.

Required:

1. Compute the net present value of Project A. (Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount.)

2. Compute the net present value of Project B. (Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount.)

3. Which investment alternative (if either) would you recommend that the company accept?

The explanation of the answers is now provided as follows:

1. Compute the net present value of Project A. (Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount.)

Cost of equipment required = $135,000

Using the formula for calculating the present value of an ordinary annuity, the present value (PV) of the annual cash inflows can be calculated as follows:

PV of annual cash inflow = Annual cash inflow * (1 - (1 / (1 + discount rate))^Project life) / discount rate) = $25,000 * ((1 - (1 / (1 + 0.17))^6) / 0.17) = $89,729.62

The present value (PV) of the salvage value can be calculated as follows:

PV of salvage value = Salvage value / (1 + + discount rate)^Project life = $9,800 / (1 + 0.17)^6 = $3,820.42

Net present value of Project A = PV of annual cash inflow + PV of salvage value - Cost of equipment required = $89,729.62 + $3,820.42 - $135,000 = -41,449.96

2. Compute the net present value of Project B. (Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount.)

Working capital investment required = $135,000

Using the formula for calculating the present value of an ordinary annuity, the present value (PV) of the annual cash inflows can be calculated as follows:

PV of annual cash inflow = Annual cash inflow * (1 - (1 / (1 + discount rate))^Project life) / discount rate) = $63,000 * ((1 - (1 / (1 + 0.17))^6) / 0.17) = $226,118.64

The present value (PV) of the Working capital investment required can be calculated as follows:

PV of Working capital investment required = Working capital investment required / (1 + + discount rate)^Project life = $135,000 / (1 + 0.17)^6 = $52,628.21

Net present value of Project B = PV of annual cash inflow + PV of Working capital investment required - Working capital investment required = = $226,118.64 + $52,628.21 - $135,000 = $143,746.85

3. Which investment alternative (if either) would you recommend that the company accept?

From parts 1 and 2 above, we have:

Net present value of Project A = -41,449.96

Net present value of Project B = $143,746.85

Since the Net present value of Project A is negative, it should be rejected.

Since the Net present value of Project B is positive, it should be accepted.

Therefore, I would recommend that company accept Project B.

6 0
3 years ago
On January 1, the first day of the fiscal year, a company issues a $5,000,000, 6%, 10-year bond that pays semiannual interest of
irga5000 [103]

Answer:

Explanation:

The journal entries are shown below:

On Jan 1 - Cash A/c Dr $5,000,000

                        To Bonds Payable A/c $5,000,000,

(Being bond is issued)

On June 30 - Interest expense A/c Dr $150,000

                           To Cash A/c                                     $150,000

(Being interest paid for cash)

On December 31,  Bonds Payable A/c Dr $5,000,000

                                   To Cash A/c                            $5,000,000

(Being payment of principal is recorded on the maturity date)

8 0
3 years ago
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