Last month Jim purchased $10,000 of U.S. Treasury bonds (their face value was $10,000). These bonds have a 30-year maturity period, and they pay 1.5%interest every threemonths (i.e., theAPRis 6%, and Jim receives a check for $150 every three months). But interest rates for similar securities have since risen to a 7% APR because of interest rate increases by the Federal Reserve Board. In view of the interest-rate increase to 7%, what is the current value of Jim’s bonds?
Answers
The current value of Jim's bonds are $8,749.57.
What is the value of Jim's bonds?
The value of the bond can be determined by calculating the present value of the cash flows of the bonds. The present value is the sum of discounted cash flows.
Value of the bond = present value of coupon payments + present value of the face value of the bond at maturity.
Present value of the face value of the bond at maturity = $10,000 / (1 + 0.0175^120) = $1247.01
Present value of coupon payments = future value / (1 + 0.07^30)
Future value = amount x annuity factor
Annuity factor = {[(1+r)^n] - 1} / r
Where:
- Amount = 1.5% x 10,000 = $150
- r = interest rate = 7%/4
n = number of years = 30 x 4 = 120
$150 x [({1.0175^120) - 1} / 0.0175] = $60,164.43
Present value = $60,164.43 / (1.0175^120) = $7,502.56
Value of the bond = $7,502.56 + $1247.01 =$8,749.57
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Answer:
current value is $8749.57
Explanation:
given data
face value = $10,000
maturity period = 30 = 30 × 4 = 120
interest = 1.5% every 3 month
solution
we will apply here bond price formula that is
bond price = coupon × ............................1
here r is rate and n is no of period and
so rate = = 1.75% = 0.0175
and coupon is $150
put here value
bond price = $150 ×
bond price = 8749.57
so current value is $8749.57
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Wendy wants to start a business. She knows many unaccredited investors who she knows will help her jumpstart her business. What constraints on investments for new businesses apply here?
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Answer: Click-to-call ad
Explanation:
From the question, we are informed that Lilla sees a search ad on her mobile phone for a restaurant and a button on the ad allows Jessica to click on the button and call the restaurant.
It should be noted that the above is a click-to-call ad. They are form of Google Ads that when someone clicks them, it calls the business directly rather than linking to the website of the business. They are important to marketing campaigns.
Answers
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What was the GDP per capita of Switzerland in 2013?
In 2013, Switzerland had the very high GDP per capita of $88,109.49 which put it higher than the United States and Brazil.
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Answers
At the time the mortgage is obtained, approximately $850,000 of the $900,000 would be classified as a long-term liability.
In the first year, the company pays $20,000 of the principal. In the second year, it pays $30,000 of the principal. This means that by the end of the second year, the company has paid a total of $20,000 + $30,000 = $50,000 of the principal.
Now, the remaining principal balance is $900,000 - $50,000 = $850,000.
Since the company will pay the remainder of the principal evenly over the final 28 years, you can calculate the annual principal payment for the remaining term:
$850,000 / 28 years = $30,357.14 per year (rounded to the nearest cent).
At the time the mortgage payable is obtained, the long-term liability portion of the mortgage is the total principal amount to be paid after the first two years. Therefore, it is:
$20,000 (Year 1 principal payment) + $30,000 (Year 2 principal payment) + ($30,357.14 x 28) ≈ $850,000.
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Final answer:
The amount of the $900,000 mortgage payable classified as a long-term liability is $870,000.
Explanation:
To determine the amount of the $900,000 mortgage payable that would be classified as a long-term liability at the time the mortgage is obtained, we need to calculate the portion of the principal that will be paid over the first year, second year, and the remaining 28 years.
- In the first year, $20,000 of the principal is paid.
- In the second year, $30,000 of the principal is paid.
- The remaining principal to be paid over the final 28 years is $900,000 - $20,000 - $30,000 = $850,000.
- The annual payment for the remaining 28 years is $850,000 / 28 = $30,357.143 (approximately).
Therefore, the amount of the $900,000 mortgage payable that would be classified as a long-term liability at the time of obtaining the mortgage is the sum of the principal payments in the first year and the remaining principal payment over the final 28 years: $20,000 + $850,000 = $870,000.
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Received $80,000 cash from each of the two shareholders to form the corporation, in addition to $2,000 in accounts receivable, $5,300 in equipment, a van (equipment) appraised at a fair market value of $13,000, and $1,200 in supplies. Gave the two owners each 500 shares of common stock with a par value of $1 per share.
b.
Purchased a vacant store for sale in a good location for $360,000, making a $72,000 cash down payment and signing a 10-year mortgage from a local bank for the rest.
c. Borrowed $50,000 from the local bank on a 10 percent, one-year note.
d. Purchased and used food and paper supplies costing $10,830 in March; paid cash.
e. Catered four parties in March for $4,200; $1,600 was billed, and the rest was received in cash.
f. Made and sold food at the retail store for $11,900 cash.
g. Received a $420 telephone bill for March to be paid in April.
h. Paid $363 in gas for the van in March.
i. Paid $6,280 in wages to employees who worked in March.
j. Paid a $300 dividend from the corporation to each owner.
k.
Purchased $50,000 of equipment (refrigerated display cases, cabinets, tables, and chairs) and renovated and decorated the new store for $20,000 (added to the cost of the building); paid cash.
Compute ending balances for Cash, Accounts Receivable, Supplies, Equipment, Building, Accounts Payable, Note Payable, Mortgage Payable, Common Stock, Additional Paid-in Capital, Retained Earnings, Food Sales Revenue, Catering Sales Revenue, Supplies Expense, Utilities Expense, Wages Expense, and Fuel Expense.
1.
Prepare an income statement in good form for the month of March 2014. (Ignore retained earnings and 80,000 in the table just below)
2.
Operating (O), investing (I), and financing (F) activities affecting cash flows. Include the direction and invest of the effect
Answers
Answer:
Explanation:
Account Name Debit Credit
Cash $160,000
Accounts Receivable $2,000
Equipment $ 18,300
Supplies $1,200
Contributed Capital $181,500
a. Received $80,000 cash from each of the two shareholders to form the corporation, in addition to $2,000 in accounts receivable, $5,300 in equipment, a van (equipment) appraised at a fair market value of $13,000 and $1,200 in supplies.
b. Purchased a vacant store for sale in a good location for $360,000, making a $72,000 cash down payment and signing a 10-year mortgage from a local bank for the rest
Account Name Debit Credit
Building $360,000
Cash $ 72,000
Notes Payable $288,000
c. Borrowed $50,000 from the local bank on a 10%, one year note.
Account Name Debit Credit
Cash $50,000
Notes Payable $50,000
d) Purchased and used food and paper supplies costing 10,830 in March; paid cash.
Purchase of Supplies:
Account Name Debit Credit
Supplies $10,830
Cash $10,830
Account Name Debit Credit
Supplies Expense $10,830
Supplies $10,830
e) Catered four parties in March for $4,200; $1,600 was billed and the rest was received in cash.
Account Name Debit Credit
Cash $2,600
Accounts Receivable $1,600
Catering Revenue $4,200
f. Made and sold food at the retail store for $11,900 cash. (assume the cost of these sales was already recorded as part of transaction d.)
Account Name Debit Credit
Cash $11,900
Food Sales Revenue $11,900
g. Received a telephone bill for March to be paid in April.
Account Name Debit Credit
Telephone Expense $420
Telephone Payable $420
h. Paid $363 in gas for the van in March
Account Name Debit Credit
Gas Expense $363
Cash $363
i. Paid $6,280 in wages to employees who worked in March.
Account Name Debit Credit
Wages Expense $6,280
Cash $6,280
j. Paid a $300 dividend from the corporation to EACH owner
Account Name Debit Credit
Retained Earnings $600
Cash $600
k. Purchased $50,000 of equipment (refrigerated display cases, cabinets, tables, and chairs) and renovated and decorated the new store for $20,000 (added to the cost of the building); paid cash.
Account Name Debit Credit
Equipment $50,000
Building $20,000
Cash $70,000
2)
a Cash flow from FINANCING ACTIVITIES
b Cash flow from INVESTING ACTIVITIES ($72,000) and Non-Cash Investing and Financing Activity ($288,000).
c Cash flow from FINANCING ACTIVITIES.
d Non-Cash OPERATING ACTIVITIES.
e Cash flow from OPERATING ACTIVITIES ($2,600); Non-Cash Operating Activity ($1,600).
f Cash flow from OPERATING ACTIVITIES
g Non-Cash OPERATING ACTIVITIES.
h Cash flow from OPERATING ACTIVITIES.
i Cash flow from OPERATING ACTIVITIES.
j Cash flow from FINANCING ACTIVITIES.
k Cash flow from INVESTING ACTIVITIES
Final answer:
In March 2014, Traveling Gourmet, Inc. had several transactions that affected its financial accounts. These transactions included receiving cash from shareholders, purchasing a store with a mortgage, borrowing money from a bank, purchasing supplies, catering events, selling food at the retail store, and making dividend payments. By analyzing these transactions, we can compute the ending balances for different accounts and prepare an income statement for the month.
Explanation:
To compute the ending balances for the various accounts, we need to track the cash inflows and outflows for each transaction. Here is a summary of the transactions and their effects on the accounts:
- a. Cash received from the two shareholders increases the Cash account; the accounts receivable, equipment, van, and supplies are assets that also increase. The issuance of common stock does not affect cash; it increases the Common Stock and Additional Paid-in Capital accounts.
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2. Sep 8 Purchase painting equipment for $21,000 cash.
3. Sep 12 Purchase office supplies on account for $3,500.
4. Sep 15 Pay employee salaries of $4,200 for the current month.
5. Sept 19 Purchase advertising to appear in the current month for $1,000 cash.
6. Sep 22 Pay office rent of $5,400 for the current month.
7. Sep 26 Receive $15,000 from customers in (1) above.
8. Sep 30 Receive cash of $6,000 in advance from a customer who plans to have his house painted in the following month.
a) Record each transaction. The company uses the following accounts: Cash, Accounts Receivable, Supplies, Equipment, Accounts Payable, Deferred Revenue, Common Stock, Retained Earnings, Service Revenue, Salaries Expense, Advertising Expense, Rent Expense.
Answers
Answer:
Explanation:
The journal entries are shown below:
1. Account receivable A/c Dr $20,000
To Deferred revenue A/c $20,000
(Being the paint house on account is recorded)
2. Equipment A/c Dr $21,000
To Cash A/c $21,000
(Being the equipment is purchased for cash)
3. Supplies A/c Dr $3,500
To Accounts Payable A/c $3,500
(Being the office supplies are purchased on credit basis)
4. Salaries expense A/c Dr $4,200
To Cash A/c $4,200
(Being the employees salaries are paid for cash)
5. Advertising expense A/c Dr $1,000
To Cash A/c $1,000
(Being the advertising are purchase for cash)
6. Rent expense A/c $5,400
To Cash A/c $5,400
(Being the rent is paid for cash)
7. Cash A/c Dr $15,000
To Account receivable A/c $15,000
(Being the cash is received)
8. Cash A/c Dr $6,0000
To Deferred revenue $6,000
(Being the cash is received)
Final answer:
The transactions of the Boilermaker House Painting Company are recorded considering the cash flow, accounts receivable, and deferred revenues with specific monetary changes respective of each transaction.
Explanation:
The transactions for Boilermaker House Painting Company can be recorded as follows:
- Accounts Receivable $20,000 | Service Revenue $20,000 - the company painted houses on credit.
- Equipment $21,000 | Cash $21,000 - the company purchased equipment for cash.
- Supplies $3,500 | Accounts Payable $3,500 - the company purchased office supplies on credit.
- Salaries Expense $4,200 | Cash $4,200 - the company paid employee salaries.
- Advertising Expense $1,000 | Cash $1,000 - the company purchased advertising for cash.
- Rent Expense $5,400 | Cash $5,400 - the company paid office rent.
- Cash $15,000 | Accounts Receivable $15,000 - the company received cash from customers.
- Deferred Revenue $6,000 | Cash $6,000 - the company received cash in advance from a customer.
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Answers
Answer:
The correct option is D (all of the above)
Explanation:
Opportunity cost is the rate of return which can be earned from the next best alternative investment opportunity with similar risk profile. Also the meaning of opportunity cost doesnt change only the factors do.
This concept is not as simple as it may first appear. The person making the decision must estimate the variability of returns on the alternative investments through the period during which the cash is expected to be used.