The current price of a 10 year $1000 par value bond is $1158.91. Interest on this bond is paid every 6 months, and the nominal annual yield is 14%, Given these facts, what is the annual coupon rate on this bond

Answers

Answer 1

Answer:

When an investor holds a particular type of bond then the expected income he anticipates receiving is called the annual coupon rate.

The annual coupon rate is calculated as the sum of coupon payments throughout the year divided by the par value.

The annual coupon rate of the bond is 16.22%.

The coupon rate can be estimated as:

The following formula is used:

$\rm Coupon \; Rate (CR) = ((Annual \;coupon \;payment)/(Par\; value \;of\; the\; bond)) *100\%$

Given,

$\rm Annual \;coupon \;payment = \$1158.91 * 14\%\n$

Annual coupon payment = 162.2

Par value of the bond= $1000

Putting values in equation:

$\rm CR = ((162.2)/(1000)) * 100\%\n\nCR =0.1622 * 100\%\n\nCR = 16.22\%$

Therefore, 16.22% is the annual coupon rate.

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Answer 2

Answer:

Answer:

16.22%

Explanation:

To calculate the annual coupon rate, you can use the following formula:

Coupon Rate= (Annual coupon payment/Par value of the bond)* 100%

Annual coupon payment= $1158.91*14%= 162.2

Par value of the bond= $1000

Coupon Rate= (162.2/1000)*100%

Coupon Rate=0.1622*100%

Coupon Rate= 16.22%

The annual coupon rate on this bond is 16.22%

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The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 17 percent a year for the next 4 years and then decreasing the growth rate to 6 percent per year. The company just paid its annual dividend in the amount of $2.40 per share. What is the current value of one share of this stock if the required rate of return is 7.90 percent?
Faeber Textile Company frequently factors its accounts receivable. During 2019, Faeber made credit sales of $100,000 to customers, under terms of 2/10, n/30. Faeber records its credit sales using gross price. In 2019, Faeber sold $70,000 of these receivables to a factor. The factor remitted 90% of the accounts receivable factored and charged a 12% commission on the gross amount of the factored receivables. The factoring agreement also requires Faeber to be responsible for any cash discounts taken by customers upon payment of the factored receivables. Faeber is charged for these cash discounts upon reimbursement by the factor. During 2019, the factor collected the remaining amount of the factored receivables, minus the 2% discount on 94% of the collected receivables, and returned the balance owed to Faeber. Faeber collected the remaining amount of the unfactored accounts receivable, minus the 2% discount on 96% of the collected receivables. Required: Prepare all the journal entries necessary for Faeber to record the preceding information.
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Tanner-UNF Corporation acquired as a long-term investment $330 million of 5.0% bonds, dated July 1, on July 1, 2021. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 6% for bonds of similar risk and maturity. Tanner-UNF paid $300.0 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2021, was $310.0 million. Required: 1. & 2. Prepare the journal entry to record Tanner-UNF’s investment in the bonds on July 1, 2021 and interest on December 31, 2021, at the effective (market) rate. 3. At what amount will Tanner-UNF report its investment in the December 31, 2021, balance sheet? 4. Suppose Moody’s bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2022, for $290.0 million. Prepare the journal entry to record the sale.

Answers

Answer and Explanation:

The Journal entries are shown below:-

1. Investment in bond Dr, $330 million

To Cash $300 million

To Discount on bond investment $30 million

(Being investment in bond is recorded)

2. Cash Dr, $8.25 million ($330 million × 5% × 6 ÷ 12)

Discount on bond investment Dr, $0.75 million

To Interest revenue $9 million ($300 million × 6% × 6 ÷ 12)

(Being recognition of bond interest and discount is recorded)

3. The computation of investment is shown below:-

Investment = $300 million + $0.75 million

= $300.75 million

4. The journal entry is shown below:-

Cash Dr, $290 million

Discount on bond inventment Dr, $29.25 million

Loss on sale of investment Dr, $10.75 million

To inventment in bond $330 million

(Being sale of investment is recorded)

If you buy 100 shares of IBM for $120/share, and the margin on your account is 50%, the broker will float you an interest-free loan of $6,000, until the price of IBM sufficiently rises to the point where you are willing to sell. You pay the broker back its $6,000, and you enjoy the capital gain.

Answers

Answer:

False

Explanation:

This is a True/False question and the answer is false because of the reason highlighted below.

When there's a decrement in the values of the market price of a 100 shares, there's a high probability that one will receive a margin call. The essence of the margin call is none other than asking to make up for the loss in the decreased value of the 100 shares because legally, the brokerage firm have the right to sell one's shares in other to cover your losses.

And also because, buying on margin can never be an "interest free.", this is the reason why the broker will demand the payment of interest on the loan.

Final answer:

The question discusses margin trading in the stock market, where the investor borrows money from a broker to buy more shares. In this example, the investor buys 100 IBM shares at $120 each, contributing half the total cost and borrowing the rest. If the share price rises, the investor can sell, repay the loan, and make a profit.

Explanation:

The topic here is related to stock market investing and more specifically, margin trading. When you buy on margin, you are essentially borrowing money from your broker to purchase more stocks than you could with just your available cash. In your example, you bought 100 shares of IBM for $120/share, which totals $12,000.

Since the margin on your account is 50%, this means that you only need to provide half of this amount, or $6,000, and the broker will loan you the remaining $6,000. The goal is that the price of IBM shares sufficiently rises, at which point you may choose to sell your shares, repay the broker's $6,000 loan, and then keep any remaining profit as your capital gain.

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LO 1.3Briefly discuss the chain of command for someone being hired into an organization as a staff managerial accountant.

Answers

Answer:

A staff managerial accountant is part of the mid-level accounting management.

The top position in the chain of command is the Chief Financial Officer, who is in charge of all financial matters within the firm, especially of presenting accurate financial information at the end of the accounting year to management, stockholders, and potential investors.

Directly below him is the controller, an important position in charge of reporting financial statements during the year, and helping gather information for auditors during external audtis.

Below a staff managerial accountant would be lower level accounting who are in charge of bookeeping on a daily basis.

Which of the following statements will an auditor most likely add to the negative from of confirmations of accounts receivable to encourage timely consideration by the recipient? A. "This is not a request for payment; remittances should not be sent to our auditors in the enclosed envelope"
B. "Report any differences on the enclosed statement directly to our auditors; no reply is necessary if this amount agrees with your records"
C. "If you do not report any differences with 15 days, it will be assumed that this statement is correct"
D. "The following invoices have been selected for confirmation and represent amounts that are overdue"

Answers

Answer:

The correct answer is letter "C": "If you do not report any differences with 15 days, it will be assumed that this statement is correct".

Explanation:

Accounts Receivable, or AR, is an accounting term used to refer to the money that is owed to a company by its customers. The customers, who may be individuals or corporations, are the debtors since they owe money for the goods or services provided by the company. When the product is sold in credit the company sets a number of days so that the customer can pay the bill amount. The term usually is 30, 60 or 90 days.

In that sense, and auditor may find 15 days suitable for a debtor for report changes in a statement, otherwise, it is considered as correct.

The Packaging Department started the month with 900 units in process, received 1 comma 600 units from the Finishing Department, and transferred 1 comma 900 units to Finished Goods. Direct materials are added at the beginning of the process and conversion costs are incurred evenly. The units still in process at the end of the month are 55% complete for conversion costs. Calculate the number of units still in process at the end of the month and the equivalent units of production. The company uses the weighted-average method. Production Cost Report - Packaging Department

Answers

Answer:

ending WIP physical units: 600

Equivalent units: 495

Explanation:

physical units:

We will add up the beginning units and the transferred-in.

Then we subtract the transefrred-out

beginning 900

received 1,600

total units during the period: 2,500

transferred out: (1,900)

ending: 600

To know the equivalent untis we multiply by their porcentage of completion:

900 x 55% = 495 units

You are saving for the college education of your two children. They are two years apart in age; one will begin college 15 years from today and the other will begin 17 years from today. You estimate your children’s college expenses to be $40,000 per year per child, payable at the beginning of each school year. The appropriate interest rate is 7 percent. Your deposits begin one year from today. You will make your last deposit when your oldest child enters college. Assume four years of college for each child. How much money must you deposit in an account each year to fund your children’s education?

Answers

Answer:

It will deposit $ 10,082.68 per yearto fund their children tuiton

Explanation:

We calculate the present value of the tuiton:

We must notice payment are made atthe beginning of the year. So this will be an annuity-due

$C * (1-(1+r)^(-time) )/(rate)(1+r) = PV\n$

C 40,000 per year

time 4 year

rate 7% = 7/100 = 0.07

$40000 * (1-(1+0.07)^(-4) )/(0.07) (1+0.07) = PV\n$

PV $144,972.6418

we round to 144,972.64

Then, we have two children and we stop the payment when the oldest children goes into college.

so one tuiton must be carryied two years into the future:

$Principal \: (1+ r)^(time) = Amount$

Principal $144,972.64

time 2 years

rate 0.07000

$144972.64 \: (1+ 0.07)^(2) = Amount$

Amount 165,979.18

We add both to get the total value of our fund:

144,972.64 + 165,979.18 = 310,951.82 = 310,952

Finally we calculate the couta of this annuity for 17 years

$PV / (1-(1+r)^(-time) )/(rate) = C\n$

PV $310,952.00

time 17 years

rate 7% = 0.07

$310952 * (1-(1+0.07)^(-17) )/(0.07) = C\n$

C $ 10,082.68

Based o the fact that there are two children involved and the annual savings have to be uniform, the annual amount to fund your children's education will be $10,808.

How much should you deposit yearly?

The amount needed for both children is:

= 2 students x ( College expenses x Present value factor for Annuity due, 7%, 4 years)

= 2 x (40,000 x 3.6243)

= $271,597

This is the total amount to be saved so the amount to be saved yearly is:

271,597 = Amount x ( ( 1 + 7%)¹⁵ - 1) / 7%

Amount = 271,597 / 25.1290

= $10,808

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