true false greater than 11 percent a bond with an $100 annual interest payment with five years to maturity would sell for a premium if interest rates were below 9 percent

Answers

Answer 1

Answer:

Answer:

True

Explanation:

Since annual interest payment, coupon payment, is $100, it shows that the face value of the bond is $1,000, effectively the coupon rate is 10%($100/$1000) whereas the discount rate which is the yield to maturity with which to present value the future cash flows is below 9%, and when coupon rate is greater than the yield, the bond sells at a premium to its face value.

Since the coupon rate is higher it is safe to conclude that the bond would sell at a premium

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What is the interest rate charged per period multiplied by the number of periods per year called?a. effective annual rateb. annual percentage ratec. periodic interest rated. compound interest rate

Answers

Answer:

The correct answer is letter "B": annual percentage rate.

Explanation:

The Annual Percentage Rate or APR is the cost per year of borrowing. By law, all financial institutions must show customers the APR of a loan or credit card, which clearly indicates the real cost of the loan. It is not the same as the Interest Rate on a loan. Loans charge interest rates but usually charge other fees such as closing costs, origination fees, and insurance costs.

"Suppose that a worker in Lago can produce either 5 units of oats or 20 pounds of tuna per year, and a worker in Abuta can produce either 20 units of oats or 5 pounds of tuna per year. There are 20 workers in each country. No trade occurs between the two countries. Lago produces and consumes 50 units of oats and 200 pounds of tuna per year while Abuta produces and consumes 200 units of oats and 50 pound of tuna per year. If trade were to occur, Lago would trade 60 pounds of tuna for 60 units of oats. If Lago now completely specializes in tuna production, how many pounds of tuna could it now consume along with the 60 units of imported oats?"

Answers

Answer:

140 pounds of tuna

Explanation:

Lago

opportunity cost of producing 1 unit of oat = 20 / 5 = 4 pounds of tuna
opportunity cost of producing 1 pound of tuna = 5 / 20 = 0.25 units of oat

Abuta

opportunity cost of producing 1 unit of oat = 5 / 20 = 0.25 pounds of tuna
opportunity cost of producing 1 pound of tuna = 20 / 5 = 4 units of oat

Lago should produce tuna while Abuta should produce oat. If they specialize:

total production of tuna = 20 x 20 = 400 pounds
total production of oat = 20 x 20 = 400 units

Lago trades 60 pounds of tuna in exchange for 60 units of oat, so it will have 140 pounds of tuna and 60 units of oat in total.

What is the payback period for the following set of cash flows? (Round your answer to 2 decimal places, e.g., 32.16.) Year Cash Flow 0 –$ 5,500 1 1,525 2 1,725 3 2,125 4 1,625

Answers

Answer:

3.08 years

Explanation:

The computation of the payback period is shown below:

Year Cash flows Cumulative cash flows

0 -$5,500 -$5,500

1 $1,525 -$3,975

2 $1,725 -$2,250

3 $2,125 -$125

4 $1,625 $1,500

Now the pay back period is

= 3 years + $125 ÷ $1,625

= 3.08 years

Final answer:

The payback period of the given cash flows is calculated by subtracting each year's cash inflow from the initial investment until the remaining amount is completely paid off. The payback period is found to be approximately 3.08 years.

Explanation:

The Payback Period is a capital budgeting method that calculates the time required to recoup the cost of an investment. In your case, the cash flow starts with an investment of $5,500 at Year 0, followed by cash inflows in subsequent years. Let's calculate the payback period in years.

Year 1: $5,500 - $1,525 = $3,975 remaining
Year 2: $3,975 - $1,725 = $2,250 remaining
Year 3: $2,250 - $2,125 = $125 remaining

At the end of Year 3, there is still $125 remaining from the original investment that has not been recouped. We need a part of the Year 4 cash inflow to pay back the rest. Therefore, the payback period in years is: 3 + ($125 / $1,625) = 3.08 years.

Learn more about Payback Period here:

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On September 11, 2017, Home Store sells a mower (that costs $370) for $600 cash with a one-year warranty that covers parts. Warranty expense is estimated at 9% of sales. On July 24, 2018, the mower is brought in for repairs covered under the warranty requiring $42 in materials taken from the Repair Parts Inventory. Prepare the September 11, 2017, entry to record the mower sale, and the July 24, 2018, entry to record the warranty repairs. (Round your answers to 2 decimal places.)

Answers

Answer:

September 11 2017

Dr Cash 600

Cr Sales revenue 600

(to record sales revenue on cash)

Dr Cost of good sold 370

Cr Inventory 370

(to record cost of good sold)

Dr Warranty expenses 54

Cr Warranty liabilities 54

(to accrue for warranty liabilities)

Jul 24 2018

Dr Warranty liabilities 42

Cr Inventory 42

(to record warranty services provided which was accrued)

Explanation:

11 Sep 2017:

- As sell of $600 is made on cash with the cost of good sold is $370, we Dr Cash 600 and Dr Cost of good sold 370 to record increase in cash and in Cost of good sold; and Cr Sales 600 and Cr Inventory 370 to record increase in sales and decrease in Inventory delivered.

- Warranty expenses should be recorded at the time to ensure matching of cost and revenue. Warranty expenses is estimated at 9% of sales, so it will be 9% x 600 = $54. Expenses is recorded and liabilities is accrued.

Jul 24 2018:

Warranty liabilities which was accrued actually occurs. So we Dr Liability by the expenses actually incurred and Cr Inventory consumed for the warranty services $42.

In an attempt to obtain listings, a broker visits sellers in a particular neighborhood and tells them that property values will soon decline due to a recent influx of minority home buyers. This tactic is _________.

Answers

Answer:

The correct answer is letter "D": illegal.

Explanation:

Blockbusting is the illegal practice by which real estate brokers spread the word among homeowners of a given area that the price of their properties is undervalued because of any false reason made up by the broker in an attempt of having owners to sell their houses so the broker can have more listings.

As a result of blockbusting, the price of houses decline. The license of brokers engaged in this activity is subject to disciplinary action.

On March 1, 2020, Parnevik Company sold goods to Goosen Inc. for $660,000 in exchange for a 5-year, zero-interest-bearing note in the face amount of $1,062,937 (an inputed rate of 10%). The goods have an inventory cost on Parnevik's books of $400,000. Required:
Prepare the journal entries for Parnevik on (a) March 1, 2020, and (b) December 31, 2020.

Answers

Answer:

Parnevik Company

Journal Entries:

(a) March 1, 2020

Debit Notes Receivable (Goosen Inc.) $660,000

Credit Sales Revenue $660,000

To record the sale of goods in exchange for a 5-year, zero-interest-bearing note in the face amount of $1,062,937.

Debit Cost of Goods Sold $400,000

Credit Inventory $400,000

To record the cost of goods sold.

(b) December 31, 2020:

Debit Interest Receivable (Goosen Inc.) $55,000

Credit Interest Revenue $55,000

To record the interest receivable for 10 months on the note.

Explanation:

The sale of goods will be recorded net of the interest. Interest Receivable from Goosen Inc. will be accumulated until when it is settled by Goosen Inc. at the end of the note's 5-year life. By that time, the interest must have accumulated to $402,937 compounded yearly.

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