Answer:
The effect of negative interest rates on the economy is reflected in option D: negative interest rates simply cannot happen in reality. Answer D is the correct response.
Explanation:
Answer C is partially correct. In reality, experiments are running on economies as today: Greece economy. After a huge recession in previous years, the Government has released bonuses that, at the end of their effective period, will be charging people for actually buy them, and not paying them back. This leads us to answer D: negative interest rates can actually happen, but they cannot exist as an economic mechanism that develops the economy: customers will go for profit, not cost.
The effect of this model is negative on the economy since it will not provide enough resources for stimulation. Also, it will not slow it down since it is not expected that an instrument with negative interest rates will be accepted, in the form of bonuses, by customers; or loans, provided by banks.
Answer: C. interest expense will not be a constant dollar amount over the life of the bond.
Explanation:
When a bond is sold at a discount, the discount will have to be amortized over the life of the bond to ensure that it reaches par at maturity.
As a result, the interest expense will be based on a larger figure every year which would mean that it would have to be larger each time. t will therefore not be a constant dollar amount over the life of the bond.
Answer:
KJ Pharma Corporation
KJ Pharma's after-tax cost of debt is:
= 4.55%.
Explanation:
a) Data and Calculations:
Face value of the bond = $100
Annual coupon rate (cost of debt) = 6.5%
Maturity period of bond = 20 years
Tax rate = 30%
After-Tax Cost of Debt = 6.5 (1 - 0.3)
= 4.55%
b) KJ Pharma's after-tax cost of debt is the interest paid on the bond less any income tax savings accounted for as deductible interest expenses. To calculate the after-tax cost of debt, KJ subtracts the company's effective tax rate from 1 and multiplies the difference by its cost of debt.
Answer:
Debit Sales Returns and Allowances $500; debit Merchandise Inventory $150; credit Accounts Receivable $500; and credit Cost of Goods Sold $150.
Explanation:
Based on the information given the required appropiate journal entry to record the return on the books of the seller, in a situation were the goods can be sold to another customer is :
Debit Sales Returns and Allowances $500
Debit Merchandise Inventory $150
Credit Accounts Receivable $500
Credit Cost of Goods Sold $150
(To record the return on the books of the seller)
