Answer: A. debit of $3,745 to Premium on Bonds Payable.
Explanation:
The carrying value of the bonds at redemption date is $103,745.
The bonds retired however, had a face value of $100,000.
The company therefore paid a premium on these bonds which is:
= 103,745 - 100,000
= $3,745
This amount will be debited to the Premium on Bonds Payable account.
Answer:
True
Explanation:
The deflation arise when there is a decline in the general level of the price in the overall economy. It could be said as a negative rate of inflation
On the other hand, the disinflation arise when the inflation rate is the decline over time but it would remain positive
Therefore the given statement is true
hence, the same is to be considered
Answer:
$3.5 trillion
Explanation:
GDP is the monetary value of all the goods manufactured and services made within the country for a specific period of time. It shows the economic condition of a country.
As per given data
Total GDP = $12 trillion
Consumption = $8 trillion
Govt. Spending = $2 trillion
Taxes = $0.5 trillion
Disposable income = GDP - Taxes = 12 Trillion - 0.5 trillion = $11.5 trillion
Private saving = Disposable Income - consumption = $11.5 trillion - 8 trillion = 3.5 trillion
Answer:
Weight of equity = 0.31067 or 31.067% or 96/309
Explanation:
WACC or weighted average cost of capital is the cost of a firm's capital structure which can comprise of debt, preferred stock and common equity. The WACC for a firm can be calculated as follows,
WACC = wD * rD * (1-tax rate) + wP * rP + wE * rE
Where,
- w represents the weight of each component based on market value in the capital structure
- r represents the cost of each component
- D, P and E represents debt, preferred stock and common equity respectively
To calculate the weight of equity in WACC computation, we first need to find out the Market value(MV) of each component and the market value of the overall capital structure.
MV of common equity = 8 million shares * 12 per share
MV of common equity = $96 million
MV of Preferred stock = 6 million shares * 30 per share
MV of Preferred stock = $180 million
The bonds are usually have a par value of $1000 unless specified otherwise.
MV of debt = 30 thousand * $1000 * 110%
MV of debt = $33 million
MV of total capital Structure = 96 + 180 + 33 => $309 million
Weight of equity = 96 / 309
Weight of equity = 0.31067 or 31.067% or 96/309
