Which of the following acquisitions would be considered the LEAST related? Group of answer choices A candy manufacturer purchase
1 answer:
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Answer:
Cash 2,214,007 debit
bonds payable 2,000,000 credit
premium on B.P 214,007 credit
Explanation:
To know the proceeds for the bonds we will calculate the present value of the coupon payment and the present vlaue of the maturity at market rate:
The coupon payment will be an ordnary annuity
Coupon payment: 2,000,000 x 0.05 = 100,000
time: 10 years x 2 payment per year = 20
rate 8.5% annual rate: 0.085/2 = 0.0425 semiannual rate
PV $1,329,436.5808
Whilethe maturity the present value of a lump sum
Maturity 2,000,000.00
time 10 years to maturity
rate 0.085
PV 884,570.83
PV coupon payment $1,329,436.5808
PV maturity $884,570.8301
Total $2,214,007.4109
facevalue 2,000,000
premium 214,007