
Concept explainers
1.
Compute the issue (sale) price on January 1 when the annual market interest rate is 5%.
1.

Answer to Problem 1CCOMP
Particulars | Amount in $ |
Present value (2) | 613,910 |
Present value of annuity (3) | 386,087 |
Issue price | 999,997 |
(Table 1)
Therefore, the issue price on January 1when annual market interest rate is 5% is $999,997.
Explanation of Solution
Present value:
Present value is the current value of an amount that is to be paid or received in future. Present value is determined by using the formula:
Annuity:
An annuity is referred as a sequence of payment of fixed amount of
Working Notes:
Compute the issue (sale) price on January 1 when the annual market interest rate is 5%:
2.
Compute the issue (sale) price on January 1 when the annual market interest rate is 4%.
2.

Answer to Problem 1CCOMP
Particulars | Amount in $ |
Present value (4) | 675,560 |
Present value of annuity (5) | 405,545 |
Issue price | 1,081,105 |
(Table 2)
Therefore, the issue price on January 11when annual market interest rate is 4% is $1,081,105.
Explanation of Solution
Present value:
Present value is the current value of an amount that is to be paid or received in future. Present value is determined by using the formula:
Annuity:
An annuity is referred as a sequence of payment of fixed amount of cash flows that occurs over the equal intervals of time.
Working Notes:
Compute the issue (sale) price on January 1 when the annual market interest rate is 4%:
3.
Compute the issue (sale) price on January 1 when the annual market interest rate is 6%.
3.

Answer to Problem 1CCOMP
Particulars | Amount in $ |
Present value (6) | 558,390 |
Present value of annuity (7) | 368,005 |
Issue price | 926,395 |
(Table 3)
Therefore, the issue price on January 11when annual market interest rate is 6% is $926,395.
Explanation of Solution
Present value:
Present value is the current value of an amount that is to be paid or received in future. Present value is determined by using the formula:
Annuity:
An annuity is referred as a sequence of payment of fixed amount of cash flows that occurs over the equal intervals of time.
Working Notes:
Compute the issue (sale) price on January 1 when the annual market interest rate is 6%:
Want to see more full solutions like this?
Chapter 11 Solutions
GB 112/212 MANAGERIAL ACC. W/ACCESS >C<
- Please need help with this accounting question answer do fastarrow_forwardJingle Ltd. and Bell Ltd. belong to the same industry. A snapshot ofsome of their financial information is given below: Jingle Ltd. Bell Ltd. Current Ratio 3.2 : 1 2 : 1 Acid - Test Ratio 1.7 : 1 1.1 : 1 Debt-Equity Ratio 30% 40% Times Interest earned 6 5 You are a loans officer and both companies have asked for an equal2-year loan. i) If you could facilitate only one loan, which company wouldyou refuse? Explain your reasoning brieflyii) If both companies could be facilitated, would you be willingto do so? Explain your argument briefly.arrow_forwardDetermine the total fixed costs of these accounting questionarrow_forward
- Perreth Drycleaners has capacity to clean up to 5,000 garments per month. Requirements 1. Complete the schedule below for the three volumes shown. 2. Why does the average cost per garment change? 3. Suppose the owner, Dale Perreth, erroneously uses the average cost per unit at full capacity to predict total costs at a volume of 2,000 garments. Would he overestimate or underestimate his total costs? By how much? Requirement 1. Complete the following schedule for the three volumes shown. (Round all unit costs to the nearest cent and all total costs to the nearest whole dollar.) Total variable costs Total fixed costs Total operating costs Variable cost per garment Fixed cost per garment 2,000 Garments 3,500 Garments 5,000 Garments $ 2,800 2.00 Average cost per garment Requirement 2. Why does the average cost per garment change? The average cost per garment changes as volume changes, due to the component of the dry cleaner's costs. The cost per unit decreases as volume , while the variable…arrow_forwardI need answer of this general accounting questionarrow_forwardCalculate the day's sales in receivables for this accounting questionarrow_forward
- Need help with this accounting questionarrow_forwardWhat is the number of shares outstanding for this accounting question?arrow_forwardQuestion 2Anti-Pandemic Pharma Co. Ltd. reports the following information inits income statement:Sales = $5,250,000;Costs = $2, 173,000;Other expenses = $187,400;Depreciation expense = $79,000;Interest expense= $53,555;Taxes = $76,000;Dividends = $69,000.$136,700 worth of new shares were also issued during the year andlong-term debt worth $65,300 was redeemed.a) Compute the cash flow from assetsb) Compute the net change in working capitalarrow_forward
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeEBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningCollege Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning



