Please need answer Assume your company just sold a mainframe computer. Thecomputer originally cost $300,000 and had accumulateddepreciation of $100,000 on the date of the sale. Instead ofthe buyer paying cash, she gave you a $400,000noninterest-bearing note due and payable in 3 years. Thereis no established exchange price for the computer, and thenote has no ready market. The prevailing rate of interest fora note of this type is 8%. What should your company recordas a gain from the sale of this computer?

Step 1: Define Time Value of MoneyTime value of money suggests that the money you have today is…

Answered: Assume your company just sold a…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 23MC: Orion Rentals is unable to collect on a note worth $25,000 and has accumulated interest of $250. It...

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Curly's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $25,000 per year forever. A representative for Curly's tells you the policy costs $450,000 Required: At what interest rate would this be a fair deal? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).) Interest rate |%
Question 2 Your firm would like to take over a manufacturing entity located in Accra, Stacy Ltd. The target company's financial position as of now is presented in the statement of financial position exhibited below. Statement of Financial Position on December 31, 2022 GH₂ ASSETS Current assets Cash Trade and other receivables Inventories Total current assets Noncurrent assets Long-term investments Property, plant, and equipment Total noncurrent assets Total assets LIABILITIES AND EQUITY Current liabilities Bank overdraft Trade payables Interest payable Current tax liability Total current liabilities Noncurrent liabilities Bank loan Obligations under finance lease Total noncurrent liabilities Total liabilities Equity Income surplus Share deals Capital surplus Stated capital Shareholders' fund Total liabilities and equity 35,650.00 380,020.00 89,762.00 505,432.00 20,500.00 1,889,510.00 1,910,010.00 2,415,442.00 14,350.00 480,912.00 11,400.00 28,569.00 535,231.00 90,000.00 75,865.00…
Ecobank holds ¢450million T-Bill but is in short of cash. It needs cash to meet the requirement of a customer who has come to withdraw ¢400million.You have been asked to approach Barclays Bank to sell the T-Bill for ¢395.5million on Monday morning with agreement to repurchase the bill on Friday evening. (a) How much in cedis does Ecobank lose in this transaction (b) What is the Repo Rate on this transaction?
Suppose someone offered to sell you a note calling for the payment of $1,000 in two years (or 730 days). They offer to sell it to you for $850. You have $850 deposit in a bank that pays a 6.76649% nominal rate with daily compounding, and you plan to leave the money in the bank unless you buy the note. The note is not risky--you are sure it will be paid on schedule. Should you buy the note? Check the decision in three ways: (1) by comparing your future value if you buy the note versus leaving your money in the bank, (2) by comparing the PV of the note with your current bank account, and (3) by comparing the effective annual rate on the note versus that of the bank account.
A bank agrees to buy three-month forward €500,000 at $1.14/€ from its client and simultaneously sells three-month €500,000 at $1.16/€ to offset the position. Three months later the Euro appreciates to $1.15/€ and the client declares bankruptcy. The following is true, except A At the end of three months, the bank will incur a loss of $5,000 compared to the expected gain. B At the end of the three month, the bank will incur a gain of $5,000 compared to the expected gain. C The current transaction requires the bank In three months to purchase €500,000 in exchange for $570,000. D The current transaction requires the bank In three months to sell €500,000 in exchange for $580,000.
4. On 1/1/21 we sell equipment and accept a 3-year note receivable for $36,500. The market value is $36,500. Payments of $13,655 include both principal and interest and are to be made annually starting on 1/1/22. The present value of the payments is $36,500. The bank would require the purchaser to pay interest of 6% in order to borrow from them. The equipment cost us $90,000 and had a book value of $40,000. Note: Be sure to show the date of each journal entry. The 'right' journal entry on the 'wrong' date is wrong. a. Prepare an amortization table b. Prepare the journal entry for 1/1/21 c. Prepare the journal entry for 12/31/21 d. Prepare the journal entry for 1/1/22 Amortization table: Journal entries: Debits Credits 1/1/21 12/31/21 1/1/22
Your company seeks to take over Good Deal Company. Your company’s offer for Good Deal is $3,000,000 in cash upon signing the agreement followed by 10 annual payments of $300,000 starting one year later. The time value of money is 10%. Find the present worth of your company’s offer and perform a sensitivity analysis i.e. find how sensitive the value of the present worth is to changes in the initial cash upon signing, amount of payments, their frequency and rate of return.
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You can buy property today for $3.1 million and sell it in 6 years for $4.1 million. (You earn no rental income on the property.) a. If the interest rate is 7%, what is the present value of the sales price? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.) b. Is the property investment attractive to you? yes or no c-1. What is the present value of the future cash flows, if you also could earn $210,000 per year rent on the property? The rent is paid at the end of each year. (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.) c-2. Is the property investment attractive to you now? yes or no
Suppose someone offered to sell you a note calling for the payment of $1,000 15 months from today. They offer to sell it to you for $850. You have $850 in a bank time deposit which pays a 7% effective annual interest rate (compounding), and you plan to leave the money in the bank unless you buy the note. The note is not risky--you are sure it will be paid on schedule. Should you buy the note?
A friend of yours hasn't taken this cCourse and therefore does not appreciate the time-value of money He offers to pay you back for that time he borrowed money and gives you two options: 1. Two equal payments of $1030, today and in 2 years, or 2. One single payment of $2060 (twice the amount) in 1 year. Now, because you appreciate the time-value of money, you realize that, while the two options appear to have equal value, the two-payment option has a greater value. Assuming money can earn 11% compounded quarterly, how much of a difference is there between the values of the two options? Use today as your focal date and ensure your answer is positive. Answer: $277
A friend of yours tells you that in Japan a specific Japanese treasury note matures for $1000 in two years can be bought or sold for $925. What is the annualized risk-free rate in this example? ) You happen to notice the same security can be purchased or sold domestically for $945, how do you arbitrage this position? How many times should you make this trade? How likely is it that your friend’s information is current and correct?

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