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Novosadov [1.4K]
2 years ago
13

Sunland Company purchased $1200000 of 11% bonds of Scott Company on January 1, 2021, paying $1122375. The bonds mature January 1

, 2031; interest is payable each July 1 and January 1. The discount of $77625 provides an effective yield of 12%. Sunland Company uses the effective-interest method and plans to hold these bonds to maturity. On July 1, 2021, Sunland Company should increase its Debt Investments account for the Scott Company bonds by:________
Business
1 answer:
xz_007 [3.2K]2 years ago
3 0

Answer:

Sunderland Company should increase debt investment by $2,685.00  

Explanation:

Sunderland Company needs to increase its debt investments account for Scott Company bonds with the difference between effective interest earned on July 1 2021 minus the actual coupon interest received as shown below:

The actual interest revenue earned = $1122375*12%

                                                           =$ 134,685.00  

The coupon interest received=$1,200,000*11%

                                                 =$ 132,000.00  

In a nutshell,the investment in bonds earned interest of $134,685 but only $132,000 was received in cash,hence the difference of $2,685 is added to the bonds investment figure($134,685-$132,000)

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Faris currently has a capital structure of 40 percent debt and 60 percent equity, but is considering a new product that will be
Gala2k [10]

Answer:

11.41%

Explanation:

Unlevered beta for new division:

= Levered beta ÷ [1 + (1 - tax) × D/E]

= 1.6 ÷ [1 + (1 - 40%) × (40 ÷ 60) ]

= 1.14

Beta for Faris's new division:

= Unlevered beta × [(1 + (1 - tax) × D/E]

= 1.14 × [1 + (1 - 40%) × (70 ÷ 30)]

= 2.74

Using CAPM,

Cost of equity, re = Rf + (beta × MRP)

                             = 8% + (2.74 × 5%)

                             = 21.71%

WACC:

= (wd × rd) + (we × re )

= (70% × 7%) + (30% × 21.71% )

= 11.41%

5 0
2 years ago
A river barge company can offer cheaper, although slower, per-pound transportation of products to companies when compared with t
VladimirAG [237]

Answer:

the cost leadership strategy.

Explanation:

A river barge company can offer cheaper, although slower, per-pound transportation of products to companies when compared with transportation by air, truck, or rail. The river barge company should first target customers whose companies use the cost leadership strategy.

A cost leadership strategy is a business strategy which is aimed at using the lowest cost of production and operation in a business.

Hence, river barge company cheaper, although slower, per-pound transportation as against the use of air, truck, or rail which would be more expensive.

3 0
2 years ago
Orlando Boom has been offered an internship at a local animal shelter for six weeks during the summer, four hours each week day.
Cerrena [4.2K]

Answer:

<u>False</u>

Explanation:

<em>There is no such thing</em> as community engagement graduation requirements. However there is internship as a requirement for college graduation.

Therefore , Orlando can use this internship to only fulfill his internship graduation requirements having learnt practical knowledge from the animal shelter for six weeks.

5 0
2 years ago
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Please describe how you have prepared for your intended major, including your readiness to succeed in your upper-division course
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3 0
2 years ago
Jack Simpson, contract negotiator for Nebula Airframe Company, is currently involved in bidding on a follow-up government contra
Schach [20]

Answer:

3,825.2 labor hours

Explanation:

Learning rate (Unit 1 and unit 2):

= Labor hour required for 2nd unit ÷ Labor hour required for 1st unit

= 1,200 ÷ 2,000

= 0.60

Learning rate (Unit 2 and unit 3):

= Labor hour required for 3rd unit ÷ Labor hour required for 2nd unit

= 1,130 ÷ 1,200

= 0.94

Average of learning rates = (0.60 + 0.94 ) ÷ 2

                                           = 0.77

As per learning curve calculator the value of 77% for 6 units = 4.0776

Cumulative time = Factor × Time of first unit

                           = 4.0776 × 2,000

                           = 8,155.2

Hence,

Time for next three units:

= Cumulative time - Sum of the time of first, second and third unit

= 8,155.2 - (2,000 + 1,200 + 1,130)

= 3,825.2 labor hours should Simpson plan for.

4 0
2 years ago
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