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natima [27]
3 years ago
13

A company has among its long-term debt, a bond due in 2015 that carries a face interest rate of 4.65 percent and pays interest a

nnually. Recently this bond sold on the New York Bond Exchange at 103.39. Assume that the company uses the effective interest method to amortize its bonds. Answer the following true/false questions and then select the appropriate multiple choice response. _____ The current market rate of interest on this bond is less than 4.65 percent. _____ The current market rate of the bond affects the amount that the company pays in annual interest. _____ The current market rate of interest affects the amount of interest expense for the current year.
Business
1 answer:
drek231 [11]3 years ago
8 0

Answer:

A company with long-term debt

A. True/false questions:  

1. __TRUE___ The current market rate of interest on this bond is less than 4.65 percent. __FALSE___ The current market rate of the bond affects the amount that the company pays in annual interest. _FALSE____ The current market rate of interest affects the amount of interest expense for the current year.

B. The appropriate multiple choice response:

2. The current market rate of interest on this bond is less than 4.65 percent.

Explanation:

Since the bond is being sold on the New York Bond Exchange at 103.39, it implies that it is selling at a premium.  Therefore, the effective interest rate will be less than the face interest rate of 4.65%.  This is the reason for the bond to be selling at a premium.  That is, it is selling above the face value of 100 per bond.  Conversely, when a bond sells at a discount, say 98 per bond, the effective interest rate will be higher than the face interest rate.  The face interest rate is the stated interest rate while the effective interest rate is the market rate.

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lisov135 [29]

An increase in the velocity of the money refers to a situation when the rate of changing leads to hand rises and ultimately results in an increase in the price level, indicating an inflation.

<h3>What is velocity of money ?</h3>

Velocity of money refers to a method with the help of which the movement of the money in an economy can be measured. When the number of hands changing money increases, there is an economic growth.

So, option C; states that there is an increase in the velocity of money when the rate at which money changes hands rises, the price level also increases.

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7 0
2 years ago
Northern Illinois Company expects to sell 36,000 units of finished goods over the next 6-month period. The company has 12,000 fi
sp2606 [1]

Answer:

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Explanation:

Total production required = Forecasted unit sales + Planned finished goods inventory balance = 36,000 + 14,000 = 50,000 units

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8 0
3 years ago
Inventory turnover is calculated as _____. a) cost of merchandise sold divided by inventory b) cost of merchandise sold divided
Molodets [167]

Answer:

B) cost of merchandise sold divided by average inventory.

Explanation:

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3 years ago
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Answer:

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Explanation:

The computation of the total cost of the new equipment is given below:

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DaniilM [7]

Answer:

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Explanation:

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8 0
2 years ago
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