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arlik [135]
3 years ago
12

On January 1, Year 1. a company issues $100.000 of 8% bonds maturing in 10 years when the market rate of interest is 9%. The bon

ds were issued at a discount. Market interest rates drop to 6% by December 31, Year 2. The company retires these bonds on December 31, Year 2. Which of the following is true?
a) The bonds can be retired at their carrying value
b) The company will incur a loss
c) The company will incur again
d) No gain or loss will be recorded
Business
1 answer:
Margarita [4]3 years ago
5 0

Answer:

b) The company will incur a loss

Explanation:

The market rate at the time of issue = 9%, while coupon rate = 8%, it says bonds provide lesser return when compared to the market rate.  

At end of year 2 market rate drops to 6% which is lower than the Bond's coupon rate. Which means the bond's providing high return when compared to the market. So, company to retire the bonds need to pay more than the par value.

As company should retire these bonds more than par value, the company incur a loss.

Option 'B is correct

The company incur a loss

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You own a large company and would like to issue bonds for $12 million to pay for the construction of a new manufacturing facilit
mars1129 [50]

Answer:

Find a bondholder or purchaser.

Explanation:

A bond issuer is someone who borrows money, in this example, my company.

In order to being able to financiate the construction of a new manufacturing facility for my company, I would have to find a bondholder (or some ofthem) that would lend me all the money, with its pertinent clauses.

I would have to fill those clauses, perhaps its money returning timeline, some finantial records, etc.

3 0
3 years ago
A local school administrator observes an increase in the number of flu cases in the public schools over the last two years. She
pshichka [43]
  1. It should be noted that the failure to vaccinate some children isn an external cost. [See the attached graph]
  2. The social cost curve is also indicated accordingly.
  3. From an efficiency perspective, subsidizing vaccines <em>does</em> make sense because, without the subsidy, the equilibrium quantity is <em>less</em> than the socially optimal quantity.
  4. The school nurse suggests publishing a list of which kids did not get a flu vaccine, in the hope that public shaming will lead people to vaccinate their children. The school nurse is hoping that social norms will act like a <em>punishment  </em>and lead the market to a<em> socially efficient </em>
  5. The flaws that the school nurse's suggestion have are:
  • People that feel passionate about not vaccinating are typically doing so for medical or religious reasons and will not sway to social norms or peer pressure. (Option B)

  • The school would potentially face a lawsuit because sharing protected health information (PHI), like immunization records, without parents' consent could be a violation depending on the regulations of the state. (Option C)

<h3>What is social Cost?</h3>

In neoclassical economics, the social cost is the total of the transaction's private costs plus the costs imposed on consumers as a result of being exposed to the process for which they are not rewarded or taxed.

In other words, it is the total of internal and external expenses.

Learn more about social cost:
brainly.com/question/28116338
#SPJ1

8 0
1 year ago
Consider the following​ statement: ​"An increase in supply decreases the equilibrium price. The decrease in price increases​ dem
pochemuha

Answer:

The correct answer is option A.

Explanation:

An increase in supply decreases the equilibrium price as the supply curve shifts rightward and intersects the demand curve at a lower point. This decline in the equilibrium price causes the quantity demanded to increase. The demand for the product remains the same.

The statement given in the question is false. A change in demand is caused by a change in other factors while the price of the product remains the same. The change in price affects the quantity demanded.

5 0
3 years ago
According to the New York Times, during the mortgage crisis real estate brokers had an incentive to steer borrowers to higher-co
just olya [345]

Answer:

Rawls' Theory of Justice.

Explanation:

Rawls argues that self-interested rational persons behind the veil of ignorance would choose two general principles of justice to structure society in the real world: 1) Principle of Equal Liberty: Each person has an equal right to the most extensive liberties compatible with similar liberties for all.

7 0
3 years ago
Garcia Company issues 11.5%, 15-year bonds with a par value of $450,000 and semiannual interest payments. On the issue date, the
noname [10]

Answer:

                                  Journal Entry

Date   Account Titles and Explanation         Debit          Credit

Jan 1   Cash                                                    $511,875

                Bond payable                                                  $450,000

                Premium on bond payable                             $61,875

                ($450,000*13.75%)

           (To record issue of bonds at premium)

4 0
3 years ago
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