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1. You want to buy a $30,000 car today and will be making monthly payments for the next 5 years. What is your car payment if your borrowing rate is 6% ? $ For 2-3 use the following: The company issues 7 %, 10-year bonds with a total face amount of $1,000,000 with interest paid semi-annually. The market rate of interest is 7.1%. n % PV PVA 10 7.00% 0.508349 7.023582 10 7.10% 0.503623 6.991230 20 3.50% 0.502566 14.212403 20 3.55% 0.497735 14.148318 2. What is the issue price of the bond? $ 3. What is the interest expense for the first interest payment? $ For 4-5 use the following Balance Sheet (partial) at 12/31/YR6 Stockholders' Equity: Common stock (par $0.25) Additional Paid in capital Total paid in capital Retained earnings Treasury stock (1,500 shares) Total stockholders' equity $25,000 3,475,000 3,500,000 1,250,000 (75,000) $4,675,000 Assume that the company resold 1,000 shares of its treasury stock for $54 per share. 4. How much would additional paid in capital change? $ 5. How much would Stockholders' Equity change? $

1. You want to buy a $30,000 car today and will be making monthly payments for the next 5 years. What is your car payment if your borrowing rate is 6% ? $ For 2-3 use the following: The company issues 7 %, 10-year bonds with a total face amount of $1,000,000 with interest paid semi-annually. The market rate of interest is 7.1%. n % PV PVA 10 7.00% 0.508349 7.023582 10 7.10% 0.503623 6.991230 20 3.50% 0.502566 14.212403 20 3.55% 0.497735 14.148318 2. What is the issue price of the bond? $ 3. What is the interest expense for the first interest payment? $ For 4-5 use the following Balance Sheet (partial) at 12/31/YR6 Stockholders' Equity: Common stock (par $0.25) Additional Paid in capital Total paid in capital Retained earnings Treasury stock (1,500 shares) Total stockholders' equity $25,000 3,475,000 3,500,000 1,250,000 (75,000) $4,675,000 Assume that the company resold 1,000 shares of its treasury stock for $54 per share. 4. How much would additional paid in capital change? $ 5. How much would Stockholders' Equity change? $

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1. You want to buy a $30,000 car today and will be making monthly payments for the next 5 years. What is your car payment if your borrowing rate is 6% ? $ For 2-3 use the following: The company issues 7 %, 10-year bonds with a total face amount of $1,000,000 with interest paid semi-annually. The market rate of interest is 7.1%. n % PV PVA 10 7.00% 0.508349 7.023582 10 7.10% 0.503623 6.991230 20 3.50% 0.502566 14.212403 20 3.55% 0.497735 14.148318 2. What is the issue price of the bond? $ 3. What is the interest expense for the first interest payment? $ For 4-5 use the following Balance Sheet (partial) at 12/31/YR6 Stockholders' Equity: Common stock (par $0.25) Additional Paid in capital Total paid in capital Retained earnings Treasury stock (1,500 shares) Total stockholders' equity $25,000 3,475,000 3,500,000 1,250,000 (75,000) $4,675,000 Assume that the company resold 1,000 shares of its treasury stock for $54 per share. 4. How much would additional paid in capital change? $ 5. How much would Stockholders' Equity change? $
Transcribed Image Text:1. You want to buy a $30,000 car today and will be making monthly payments for the next 5 years. What is your car payment if your borrowing rate is 6% ? $ For 2-3 use the following: The company issues 7 %, 10-year bonds with a total face amount of $1,000,000 with interest paid semi-annually. The market rate of interest is 7.1%. n % PV PVA 10 7.00% 0.508349 7.023582 10 7.10% 0.503623 6.991230 20 3.50% 0.502566 14.212403 20 3.55% 0.497735 14.148318 2. What is the issue price of the bond? $ 3. What is the interest expense for the first interest payment? $ For 4-5 use the following Balance Sheet (partial) at 12/31/YR6 Stockholders' Equity: Common stock (par $0.25) Additional Paid in capital Total paid in capital Retained earnings Treasury stock (1,500 shares) Total stockholders' equity $25,000 3,475,000 3,500,000 1,250,000 (75,000) $4,675,000 Assume that the company resold 1,000 shares of its treasury stock for $54 per share. 4. How much would additional paid in capital change? $ 5. How much would Stockholders' Equity change? $
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