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densk [106]
3 years ago
5

Which bond would you expect to pay the highest interest rate?

Business
1 answer:
UNO [17]3 years ago
4 0

Answer:

The bond that should pay the highest interest rate is:

d. a bond issued by a new restaurant chain.

Explanation:

This is based on the fact that the new restaurant chain is untested, has higher risk profile and the bondholders are assuming higher risks, and the bond cannot be compared to the bonds issued by the US government, New York State, and General Motors, in that order.  The new restaurant chain will be offering a higher rate of return than others because it is new to the bond market and would like to attract potential bond investors.   Without the higher rate, therefore, it will not be successful in the bond issuance.

You might be interested in
Chapman Company, a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The com
Ivan

Answer:

Chapman Company

Statement of Cash Flows for the year ended May 2014:

Operating activities:

Cash from customers     $1,238,350

Cash to suppliers              ($683,910)

Salaries & Wages                (277,340)

Other expenses                    (10,548)

Income Tax                           (43,250)

Net Cash from operating activities       223,302

Investing activities:

Plant                                      (17,610)         (17,610)

Financing activities:

Dividends                           (104,312)

Interest                                (73,340)

Bonds                                  (29,870)

Issue of stock                        9,570

Net cash from financing activities        (197,952)

Net cash flows                                          $7,740

Explanation:

a) Data and Calculations:

1. CHAPMAN COMPANY

COMPARATIVE BALANCE SHEET

AS OF MAY 31

                                                 2014                2013

Current assets

Cash                                     $28,560       $20,820

Accounts receivable              75,850          58,940

Inventory                             220,080        250,770

Prepaid expenses                    9,148             7,580

Total current assets           333,638           338,110

Plant assets

Plant assets                        600,070        502,460

Less: Accumulated depreciation

—plant assets                      150,060         125,320

Net plant assets                 450,010          377,140

Total assets                     $783,648       $715,250

Current liabilities

Accounts payable            $123,190        $115,200

Salaries & wages payable  47,660           72,420

Interest payable                  27,980          25,490

Total current liabilities       198,830          213,110

Long-term debt

Bonds payable                    70,770        100,640

Total liabilities                  269,600        313,750

Stockholders’ equity

Common stock, $10 par  370,460       280,890

Retained earnings            143,588         120,610

Total stockholders’ equity 514,048      401,500

Total liabilities and stockholders’

equity                              $783,648     $715,250

2. CHAPMAN COMPANY

INCOME STATEMENT

FOR THE YEAR ENDED MAY 31, 2014

Sales revenue                    $1,255,260

Cost of goods sold                 722,590

Gross profit                             532,670

Expenses

Salaries and wages expense 252,580

Interest expense                       75,830

Depreciation expense              24,740

Other expenses                         8,980

Total expenses                       362,130

Operating income                  170,540

Income tax expense               43,250

Net income                          $127,290

3) Cash Receipts:

Cash from customers $1,238,350

Issue of stock                       9,570

4) Cash Payments:

Cash to suppliers         $683,910

Plant                                   17,610

Income Tax                      43,250

Dividends                        104,312

Salaries & Wages          277,340

Interest                            73,340

Other expenses              10,548

Bonds                              29,870

5) Prepaid Expenses

Ending balance             $9,148

Expenses                        8,980

Beginning balance         7,580

Cash paid                   $10,548

6) Accounts Receivable:

Beginning balance  $58,940

Sales                     1,255,260

Ending balance         75,850

Cash received   $1,238,350

7) Accounts Payable:

Beginning balance $115,200

Purchases                691,900

Ending balance      $123,190

Cash paid              $693,910

8) Purchases:

Ending inventory    $220,080

Cost of goods sold   722,590

Beginning inventory 250,770

Purchases               $691,900

9) Salaries and Wages Payable

Beginning balance $72,420

Expenses               252,580

Ending balance        47,660

Cash paid            $277,340

10) Interest payable:

Beginning balance $25,490

Expense                    75,830

Ending balance        27,980

Cash paid               $73,340

8 0
3 years ago
Empathy involves _____.
oksian1 [2.3K]

Answer:

active listening

Explanation:

Empathy involves making every effort to understand others FROM THEIR POINT OF VIEW. It means communicating an understanding of how THAT PERSON feels in a situation, NOT how YOU would feel in that situation.

Empathy is defined as “the feeling that you understand and share another person's experiences and emotions” or “the ability to share someone else's feelings”. Feeling sorry for a person automatically generates feelings of pity, which is not helpful in situations where people are in pain.

I hope this helps! :)

☁️☁️☁️☁️☁️☁️☁️

3 0
2 years ago
Giant inc. is thinking about eliminating one of its unprofitable product lines. when conducting incremental analysis related to
AlexFokin [52]
When conducting incremental analysis related to the decision if it should eliminate one of its unprofitable product lines, Giant should assume a percentage of fixed costs associated with the discontinued product line will remain, where fixed costs <span>are the costs </span><span>that have to be paid by a company, independent of any business activity. They are not variable.</span>
5 0
2 years ago
Tax that you pay when making a profit from selling a house is an example of
vovikov84 [41]
The tax you pay when making a profit from selling a house is an example of Capital Gains Tax because you are selling it for more than what you paid for it. Capital Gains Tax is defined as a tax on a profit from the sale of property or a investment. 
8 0
3 years ago
Read 2 more answers
Ten cavemen with a remaining average life expectancy of 10 years use a path from their cave to a spring some distance away. The
sergij07 [2.7K]

Answer:

a. B/C Ratio = 0.296  

b. B/C Ratio = 2.964

c. Y = 12.05 USD will be the maximum amount charged by the manager.

   Y = 12.05 x 10 = 120.54 USD for the whole group of 10

Explanation:

Solution:

Data Given:

Number of Individuals = 10

Number of Stones = 100

Life Expectancy = 10 Years

Annual benefit = 8.25 USD

Stone Removal Cost = 2.50 USD

Interest Rate = 2%

a. If all the stones are removed by one individual:

Cost = 100 stones x Stone Removal Cost

Cost = 100 x 2.50 = 250 USD

Now, we have to calculate the Benefit/Cost Ratio for this individual by using the following formula:

B/C Ratio = \frac{AB (P/A, 2, 10)}{Cost}

Where,

AB = Annual Benefit = 8.25 USD

(P/A, 2%, 10) = 8.983     (From the compound interest table)

Cost = 250 USD

B/C Ratio = \frac{8.25 * 8.983}{250}

B/C Ratio = 0.296

b. Each individual removing 10 stones.

Number of individuals = 10

So, the cost of removing the stones will be:

Cost = 10 x 2.50 = 25 USD

So,

B/C Ratio = \frac{AB (P/A, 2, 10)}{Cost}  

B/C Ratio = \frac{8.25 * 8.983}{25}

 B/C Ratio = 2.964

c.

In this part, we are already given the B/C ratio, now we need to calculate the maximum amount charged by the manager for the help.

B/C ratio = 2

Let, Y be the amount of the manager. So,

B/C Ratio =  \frac{AB (P/A, 2, 10)}{Cost + Y}  

Plugging in the values and solving for Y:

2 = \frac{8.25 * 8.983}{25 + Y}

50 + 2Y = 8.25 x 8.983

2Y = 74.109 - 50

2Y = 24.109  

Y = 24.109/2

Y = 12.05 USD will be the maximum amount charged by the manager.

Y = 12.05 x 10 = 120.54 USD for the whole group of 10

8 0
3 years ago
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