15. Question: : (TCO D) On January 1, Martinez Inc. issued $3,000,000, 11% bonds for $3,195,000. The market rate of interest for these bonds is 10%. Interest is payable annually on December 31. Martinez uses the effective-interest method of amortizing bond premium.
(TCO A) On March 1, 2010, Ruiz Corporation issued $800,000 of 8% nonconvertible bonds at 104, which are due on February 28, 2030. In addition, each $1,000 bond was issued with 25 detachable stock warrants, each of which entitled the bondholder to purchase for $50 one share of Ruiz common stock, par value $25. The bonds without the warrants would normally sell at 95. On March 1, 2010, the fair market value of Ruiz's common stock was $40 per share and the fair market value of the warrants was $2.00. What amount should Ruiz record on March 1, 2010 as paid-in capital from stock warrants?
The bond is currently selling at par ($1,000). Which of the following statements is NOT CORRECT? Question 18 Which of the following statements is CORRECT? Question 19 A 12-year bond has an annual coupon rate of 9%. The coupon rate will remain fixed until the bond matures.
An annuity pays $24,000 per year for 11 years (first payment one year from today). You feel the appropriate discount rate is 13%. What is the annuity worth to you today? 10. You deposit $16,000 per year for 12 years (deposits at the end of each year) in an account that pays an annual interest rate of 14%.
A company leases a machine on January 1, Year One for five years which call for annual payments of $4,000 for the first year and then $10,000 per year after that. The present value of these payments based on a reasonable interest rate of 10 percent is assumed to be $38,000. This lease
You are to receive $12,000 at the end of 5 years. The available yield on investments is 6%. Which table would you use to determine the value of that sum today?-PV $1 As the interest rate increases, the present value of an amount to be received at the end of afixed period-decreases. As the time period until receipt increases, the present value of an amount at a fixed interest Rate - decreases A home buyer signed a 20-year, 8% mortgage for $72,500. How much should the annual loan payments be?
Each bond would have 75 warrants attached to it, each exercisable into one share of stock at an exercise price of $47. The firm’s straight bonds yield 10%. Each warrant is expected to have a market value of $2.00 given that the stock sells for $42. What coupon interest rate must the company set on the bonds in order to sell the bonds-with-warrants at par? Question 24 Europa Corporation is financing an ongoing construction project.
On July 1, 2012, Herzog Mining lends cash and accepts a $9,000 note receivable that offers 10% interest and is due in nine months. Herzog reported its financial statements at the end of fiscal year on December 31, 2012 (An adjusting entry for interest revenue was recorded). How would Herzog record the transaction on April 1, 2013, when the borrower pays Herzog the correct amount owed? A. B. C. D. 2 4.
In total it will be $74,295; since the investors paid $80,000 the yield rate is less than 8%. As for the correctness of the $748 first year bond discount amortization, the calculation follows: Since the bond proceeds were $80,000 and the true yield is 7.23% per year. 7.23% came from the interest table that I have. Then for Year 1 net interest should be $80,000*.0723 =$5784. But the stated interest payment is $5,000, thus the $784 interest expense is amortization of the bond discount.
The net cash inflow and cash outflow are calculated using sales and production figures for the next 8 years. The unit cost from the first year is £0.89 which is the cost per mashing without depreciation and divided by 13,000 bottles. From this information provided, the cost will increase by 3.5% and also the selling price will increase by 4% every year (reference 4). These figures are based on the current rate inflation of 4% which is shown in appendix 9 The capital allowances are worked out on cased of 20% (Reference 5) and the annual investment allowance is £100,000 is available (Reference 6) in the first year which is restricted to £87,359. This figure is substrated from the acquisition giving a result of £332,641 which is the written down value.