Pontchartrain Company issues $20,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2017. Interest is paid on June 30 and De
1 answer:
Answer:
$1,568,498
Explanation:
First calculate the Amont of discount
Discount on the bond = Face value - Proceeds from the bond = $20,000,000 - $19,604,145 = $395,855
Now prepare the bond amortization
The Bond Amortization schedule is attached with this answer, please find it.
Now calculate the interest expense for 2017
Interest Expense 2017 = $784,165.80 + $784,332.43
Interest Expense 2017 = $1,568,498.23
Interest Expense 2017 = $1,568,498
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Answer:
The firm's profits if it charges the two prices as mentioned above = $ 1425
Explanation:
P.S - The exact question is -
Proof -
we calculate the profits individually for 2 different prices:
When price = $75:
Quantity sold = 15 units
Total revenue = 15 × 75 = $1125
Total cost = Marginal cost × quantity
= 20 x 15 = $ 300
⇒Total cost = $300
So,
Profit = 1125 - 300 = $825
When price = $35 :
Quantity sold = 55 - 15 (quantity purchased at price = $75)
⇒Quantity sold = 40
Total revenue = 40 × 35 = $1400
Total cost = Marginal cost × quantity
= 20 x 40 = $ 800
⇒Total cost = $800
So,
Profit = 1400 - 800 = $600
Now,
Total combined profit = 825 + 600 = $1425
∴ we get
The firm's profits if it charges the two prices as mentioned above = $ 1425
