1. A company currently has three bond issues outstanding. The appropriate discount rate for each is 9% and all bonds have a par value of $1,000. Assume coupons are paid annually, and that they are not callable. What is the current price of each bond? A. 5-year bond with a 6.5% coupon B. 25-year bond with a 6.5% coupon C. 16-year zero coupon bond 2. […]
1. You are considering buying a call option for Bernie Bros, a company that is building a series of assisted living homes for aging hippies. Bernie Bros current stock price is $27.50, and the call option you are looking at sells for $6.40 with a $24.00 strike price and six months to expiration. a. What is the intrinsic value of this option today? b. What […]
Use the following data to answer Questions 43 and 44 The records at the end of June 2011 for SunBlush Technologies showed the following for a particular kind of merchandise: Inventory, May 31, 2011, at FIFO: 20 units @ $14 = $280 Inventory, May 31, 2011, at Weighted-Average: 20 units @ $7 = $140 Transactions Units Unit Cost Total Cost Purchase, June 9, 2012 50 […]
A manager examined data flow diagrams in a small portion of system development projects and determined that there were nearly 12.5% of them with errors. His boss, the Vice-President for Systems Development wants a better estimate of the percentage so you are tasked to sample the diagrams produced for the past five years and report back. a) How large a sample would one have to […]
“1. Can the nominal interest rate ever be negative? Can the real interest rate ever be negative? Explain.2. What is a sunk cost? Should it be included in the incremental cash flows for a project? Why or why not?3. What is an opportunity cost? Should it be included in the incremental cash flows for a project? Why or why not?4. Briefly describe the four characteristics […]
I have attached my question.Part FiveDuring the third year of operations, Big Al’s estimates that 415,000 pizzas (385,000 meat and 30,000 veggie) will be produced. Direct material costs per unit are $.74 per meat pizza and $.62 per veggie pizza. Direct labor costs are $2.51 per meat pizza and $2.78 per veggie pizza. Monthly fi xed selling and administrative costs are $15,300 while monthly fi […]
At December 31, 2011, Klimek Company reports the following results for the year.Cash Sales………………$1,015,000Credit Sales………………1,241,000In addition, its unadjusted trial balance includes the following items.Accounts Receivable……………………..$475,000 debit5,200 creditRequired 1. Prepare the adjusting entry for Klimek Co. to recognize bad debts under each of the following inde-pendent assumptions. a. Bad debts are estimated to be 2.5% of credit sales. b. Bad debts are estimated to be 1.5% […]
Question:Park Corporation is planning to issue bonds with a face value of $2,017,000 and a coupon rate of 10 percent. The bonds mature in 5 years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. Park uses the effective-interest amortization method and does not use a premium account. Assume an annual market […]
Chance Company had two operating divisions, one manufacturing farm equipment and the other office supplies. Both divisions are considered separate components as defined by generally accepted accounting principles. The farm equipment component had been unprofitable, and on September 1, 2011, the company adopted a plan to sell the assets of the division. The actual sale was effected on December 15, 2011, at a price of […]
“Phantasy, Inc. is a research and development company that primarily develops and patents products. Phantasy, Inc. then licenses other companies to produce and sell the products. In return, Phantasy, Inc. receives royalties from these companies.In 2009, Phantasy, Inc. developed and patented a product and then licensed Thurber Company to produce and sell it. Thurber Company will pay royalties to Phantasy, Inc. based upon the amount […]
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