INR BONDS Expand search. What is the times interest earned ratio for Company Surfer Co.? A) Bonds issued below the face amount. Explanation: ($7,000 + $1,000 + $2,000)/1,000 = 10.0 times. 12/31/2023 7,000 7,961 961 200,000 Answer: B C) Greater than the interest expense. $7,000^ 13.59033** = $ 95,132 (rounded) Business Accounting 13. D) $10,800. C) (Net income + interest expense + tax expense)/Interest expense. What is the face amount of the bonds? 12/31/2022 7,000 7,889 889 198,114 Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value Total stockholders' equity (end of year) 36,000 C) $214,877. 12/31/2022 7,000 7,889 889 198,114 A) Decrease for bonds issued at a discount and decrease for bonds issued at a premium. Watch the full video for more on this. Explanation: 12/31/2021 7,000 7,822 822 196,370 A) $139,609. A) 4%. B) Present value of $1. They sold their house in Maplewood, New Jersey, and moved near Seattle. N = 10 years 2 periods each year = 20 periods. Less than the interest rate stated on the bond. Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value a. dependent on rates stated on the bond These bonds will sell at a price that is: Explanation: $220,000/$5,500,000 = 4% 2 payments per year = 8%. The current market rate of interest is also 10%. 2. A) $197,612.34 Bonds release firms from the restrictions that are often attached to bank loans. Better health and shorter duration generally enable companies to pay less in interest. Government bond ratings are typically very high, although this can depend on the specific government issuing the bond. Higher than the rate stated on the bond. D) Unsecured and serial. C) Lease. B) $95,842. Answer: C Answer: D A) A debit of $3 million to a loss account. 76) On January 1, 2021, a company signs a 25-year lease for land. B) Face amount times the market interest rate. Like government bonds, these bonds are typically quite highly rated. Generally if a bond is said to be sold at discount if the state. Explanation: The initial carrying amount of $5,500,000 is greater than the face amount of $5,000,000. B) $5,470,000. (Use Table 2 and Table 4, contained within a separate file.) C) At a discount. 128) Discount-Mart issues $10 million in bonds on January 1, 2021. Tax expense 21,000 b. decreases the amount of interest expense Total liabilities (end of year) 24,000 Answer: A Moving along, we've got a bottle of the Bottled in Bond rye. What is the debt to equity ratio for Channel Co.? At this point, the full face value of the bond is paid to investors. i = 8%/2 semi annual periods = 4% Interest payments are made semi-annually. D) Cannot be determined from the given information. What are some characteristics of an effective manager? 156) The Raptor retires a $20 million bond issue when the carrying value of the bonds is $18 million, but the market value of the bonds is $15 million. One can invest in a bond fund, where a mutual fund manager will make all these decisions in exchange for fees. 12/31/2021 $ 7,000 $ 6,253 $ 747 103,465 D) The stated interest rate and the market interest rate are unrelated. 12/31/2021 300,000 347,464 47,464 8,734,070 69) Which of the following is the number one method of external financing by U.S. companies? Answer: D a. decreases the face amount of bonds payable Therefore, if the bond sells at a price that is higher than its face value, it sells at the rate that is higher than effective interest rate. 06/30/2021 $ 400,000 $ 440,000 $ 40,000 8,840,000 B. The offers that appear in this table are from partnerships from which Investopedia receives compensation. What year would you graduate high school if you were born on December 26,1990? Since investors buy stocks to make money, diluting the value of their investments is highly undesirable. C) $53,605. 12/31/2021 400,000 442,000 42,000 8,882,000 Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value I = 8%/2 semiannual periods = 4%. B) Equal to the interest expense. 136) X2 issued callable bonds on January 1, 2021. B) Sold for the $500,000 face amount plus $10,000 of accrued interest. technique in which assets are valued at their current market value A bond may be issued at a discount for the following reasons: 1. The entry to record the retirement will include: A) The actual yield rate. D) Cannot be determined from the given information. B) $320,000 This . B) $107,000. (Use Table 2 and Table 4, contained within a separate file.) D) $500,000. $12 which is it's market value. C) Carrying value times the market interest rate. What amount will be recorded for interest expense for the first month's payment on January 31, 2021? C) Bonds that mature all at once. Interest payments are made semi-annually. ($ in millions) Total assets (end of year) 60,000 The investor agrees to give the corporation a certain amount of money for a specific period of time. A) Note. The market rate for this type of bond is 6%. More than the rate stated on the face of the bond, Less than the rate . B) Leasing may offer protection against risk of declining asset values. Coupon rate influence bond's price by influencing its competitiveness and value in the open market. positions between the same counterparties. B) $8,686,606. Callable bonds are more complex investments than normal bonds. $15,000^ 14.21240** = $ 213,186 C. Equal to the rate. B) Total assets of $525,000.00, and total liabilities of $327,666.30. B) Bonds that mature in installments. 06/30/2021 $ 300,000 $ 345,639 $ 45,639 8,686,606 The money market deals in short-term loans, generally for a period of a year or less. C) $104,212. Issuing bonds also gives companies significantly greater freedom to operate as they see fit. When a bond is trading at less than face value than the coupon rate (stated rate) of the bond will be lower than market rate of interest. 2. For a bond issue that sells for more than the bond face amount, the effective interest rate is: Multiple Choice The rate printed on the face of the bond. Explanation: $24,000/$36,000 = 0.67 (rounded). A) Assuming more debt is always bad for the company. 06/30/2021 $ 250,000 $ 220,000 $ 30,000 5,470,000 164) Air Destinations issues a bond due in 10 years with a stated interest rate of 6% and a face value of $500,000. B) Carrying value and interest expense decrease. **Table 4: 77) On July 1, 2021, a company signs a 30-month lease for an office building. The basic features of a bondcredit quality and durationare the principal determinants of a bond's interest rate. Therefore, if the bond sells at a price that is higher than its face value, it sells at the rate that is higher than effective interest rate. C) Market rate. THA's accountant has projected the following amortization schedule from issuance until maturity: B) The final carrying value is zero in an amortization schedule for bonds. A) 21.0 times. The bonds have a ten-year term and pay interest semiannually on June 30 and December 31 each year. C) Is a schedule that reflects the changes in carrying value of the bond over its term to maturity. n = 5 years 2 periods each year = 10 periods. 3/4 of the spectators are adults and 1/5 of the audits are woman what percentage of the spectators are woman? 06/30/2023 7,000 7,925 925 199,039 effective interest method of amortizing bond discount is used? Bottling proof is the . A) Bond 1. Stock issuance, on the other hand, puts additional stock shares in circulation. $200,000 0.45639* = $ 91,278 Market Rate of Return 12 % 8 % 15 % 10 % 170) Underwater Experiences issues a bond due in 5 years with a stated interest rate of 6% and a face value of $100,000. The bond proceeds are then used to finance that project, and the coupon payments and principal are paid out through the project's revenue. NDTV's total expenses in the December quarter rose 4.93 per cent to Rs 88.27 crore. Firms or governments may issue bonds for special projects or through special purpose vehicles. Interest payments are made semi-annually. Answer: C $100,000 0.78120* = $ 78,120 b. higher than the interest rate stated on the bond. A) $1,000.00 The company's normal borrowing rate is 8% (2% every three months). Explanation: Total assets = $500,000 (beginning) + $25,000 (PV of lease payments = $525,000). 49) Which of the following is not a primary source of corporate debt financing? (Use a financial calculator or Excel) 182) Which of the following is not a true statement? 06/30/2021 $ 300,000 $ 345,639 $ 45,639 8,686,606 A) 6.0%. $50,000 0.55839* = $ 27,920 (rounded) Hence, total value of bond = 5,000,000 + 200,000 = 52,000,000. Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value D) 8.5 times. 06/30/2021 $ 250,000 $ 220,000 $ 30,000 5,470,000 i = 8%/2 semi-annual periods = 4% D) Less than the market rate. 06/30/2022 7,000 7,855 855 197,225 What is the return on assets for Surfer Co.? C) 6.6%. A) Bond 1. B) Current bond market price. These bonds will usually be rated similarly to the over-encompassing government. Therefore, the bonds: 89) A bond issue with a face amount of $500,000 bears interest at the rate of 10%. The bond proceeds are then used to finance that project, and the coupon payments and principal are paid out through the projects revenue. 01/01/2021 $ 194,758 The bonds have a ten-year term and pay interest semiannually on June 30 and December 31 each year. Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value Answer: D (Use Table 2 and Table 4, contained within a separate file.) D) Stated interest rate. Coupon payments for government bonds are typically paid out from government revenue, such as taxes. The annual membership fees are collected in advance, so when these fees are received, Anytime Fitness cannot record the entire amount as current revenue. Bonds are getting sold-off into March 23 -Bond Bytes-22nd Feb 2023 https://lnkd.in/dxYCNPJT #rbi #gsec #bondmarkets #psubonds. The present value of the principal amount due at the end of the life of the . $200,000 $2,387.66 = $197,612.34 new carrying value. What is the market rate of interest for a bond issue which sells for more than face amount? Supranational entities refer to global entities that are not based in a specific nation. - Sold for the $500,000 face amount less $10,000 of accrued interest. B) $320,000 A) Decrease in assets. Less fiscally healthy companies and those issuing long-term debt are generally forced to pay higher interest rates to entice investors. D) 7%. A) $5,000,000. Net income 54,000 Answer: C Annual payments of $20,000 begin on December 31, 2021. Step 1 - Calculate the Present Value of the Face Value of $100,000. 66) A company issues a $200,000, 5%, six-year note on January 1, 2021. A bond's price is more likely to rise or fall in the middle of its term based on conditions at that time. A) $10,000,000. D) Present value of an ordinary annuity of $1. 06/30/2022 300,000 349,363 49,363 8,783,433 A) August 1, 2021 C) 18.0 times. These bonds start just like other bonds but offer investors the opportunity to convert their holdings into a predetermined number of stock shares. D) $1,000.60, Answer: A n = 5 years 2 periods each year = 10 periods D) Supported by specific assets pledged as collateral by the issuer. B) 10%. Less than the effective interest. D) $250,000. D) Increases expenses, increases liabilities, and decreases assets. d. higher than rate stated on the bond, What is the effective interest rate of a bond measured at amortized cost? 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for a bond issue that sells for more