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- Subject- accountingIf $2,000,000 of 10% bonds are issued at 97, the amount of cash received from the sale is a. $2,100,000 b. $1,940,000 c. $2,060,000 d. $2,000,000The existing 10 year, 6% bonds are trading in the market at $900. The corporate tax rate is 32% After-tax interest rate = YTM (1-T) 2a. Calculate the interest rate for the new bonds. 2b.What is the after-tax interest rate for the new bonds?
- A $10,000 bond quoted at 106 would sell for: A. $10,106. B. $106. C. $10,000. D. $10,600.TI209 JADMANE BO Sources Trade and other payables Short-term borrowings Mortgage Long-term borrowings Share capital Retained earnings Amounts $200,000 250,000 500,000 250,000 300,000 800,000 The before-tax bank charges are 11.0% for the short-term borrowings, 10.0% for the long-term borrowings, and 10.5% on the mortgage. The shareholders expect to earn 16%. Assume that the company's income tax rate is 50%. 40% Questions financing 1. Calculate the company's after-tax cost of borrowing. 2. Calculate the company's weighted average cost of capital.Exercise 7-19 (Algo) Bonds payable-various issues LO 7-8 Reynolds Company issued $71 million face amount of 4.25% bonds when market interest rates were 4.13% for bonds of similar risk and other characteristics. Required: a. How much interest will be paid annually on these bonds? Note: Enter your answer in dollars, not millions of dollars. b. Were the bonds issued at a premium or discount? c. Will the annual interest expense on these bonds be more than, equal to, or less than the amount of interest paid each year? a. Annual interest payment b. Bonds issued c. Annual interest expense will be
- A 6% coupon U.S. Treasury note pays interest on May 31 and November 30 and is traded for settlement on August 10. What is the accrued interest on the $100,000 face amount of this note? A. 581.97 B.1,163.93 C.2,327.87 D.3,000.00BBK 1000,7% 2 years were corporate bonds floated by Barclays bank of Kenya. The bonds were sold at a discount of Ksh 950. Assume that the prevailing rates of interest were 9%. Required: (a) Compute the yield to maturity (b) Determine the value of the bond at the point of purchase (c) Explain the concept of bond stripping.Question 12 Gulf Company issued bonds with a par value of $500,000 for cash of $530,000. What is the account's name and type representing the difference between par value and issue price? OA A bond premium; a contra asset account O B. A bond discount; a contra equity account. OCA bond premium; an adjunct account. O D. A bond discount; a contra liability account.
- A municipal bond has a YTM of 5.19 percent while the YTM of a comparable taxable bond is 7.78 percent. What is the tax rate that will make an investor indifferent between the municipal bond and the taxable bond? Multiple Choice4 3.65 % 34.54% 45.37 % 52.76 % 37.99%Instructions Present Value Tables Chart of Accounts Journal Final Questions Instructions Campbell Inc. produces and sells outdoor equipment. On July 1, Year 1, Campbell Inc. issued $60,400,000 of 10-year, 12% bonds at a market (effective) interest rate of 11%, receiving cash of $64,009,069. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1.* 2. Journalize the entries to record the following:* a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.) b. The interest payment on June 30, Year 2, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.) 3. Determine the total interest expense for Year 1. 4. Will the bond proceeds always be…10-8.5% bonds sold at OMR 100 less cost of flotation at OMR 5 and cost of underwriting commission charges at OMR 2.500. If the firm pays tax at a rate of 35%, what is the cost of debt after tax? a. 2.97% b. 5.52% c. 5.97% d. 3.21% Clear my choice
