Answer:
$20,000
Explanation:
Bond discount at the issuance of bond:
= Worth of Bonds issued - [(Worth of Bonds issued ÷ 100) × Issue price]
= 705,000 - [($705,000 ÷ 100) × 98]
= $705,000 - $690,900
= $14,100
Bond Payable = $705,000
Unamortized bond discount:
= Bond discount at the issuance of bond - Amortized amount
= $14,100 - $8,200
= $5,900
Redemption Value of Bond = Retired price of bonds × 7,050
= 102 × 7,050
= $719,100
Loss on retirement on Bond:
= Redemption Value of Bond - (Worth of Bonds issued - Unamortized bond discount)
= 719,100 - (705,000 - 5,900)
= 719,100 - 699,100
= $20,000
Answer:
D. Inflation factors to actual costs incurred by the contractor
Explanation:
The effect of inflation on the profitability of a product cannot be overemphasized. At the time of inflation the profitability of a project will be reduced and the cost of capital will increase. The effect of inflation on a project can be determined by applying inflation factor.
Inflation impacts on the cash flow from a project, especially a project with a long life span.
Answer:
D. Kurt’s division is less risky than the other divisions.
Explanation:
Based on the information provided within the question it can be said that the most likely reason is that Kurt’s division is less risky than the other divisions. Just as the saying goes "the greater the risk, the greater the reward", the same goes for the opposite, the lower the risk that a division has to undertake the lower the percent for the required return.
Answer:
$0.53 per share
Explanation:
The computation of basic earnings per share is shown below:-
Basic earnings per share = (Net income - Preferred dividend) ÷ (Outstanding common stock)
= ($50,000 - $2,000) ÷ (40,000 × 2) + ($10,000 × 6 ÷ 12 × 2)
= $48,000 ÷ (80,0000 + $10,000)
= $48,000 ÷ $90,000
= $0.53 per share
Therefore for computing the basic earnings per share we simply applied the above formula.
Answer: 12%
Explanation:
The semi annual market rate of interest on the bonds will be the interest expense divided by the carrying value i.e issue price of bond which is then multiplied by 100%. This will be mathematically expressed as:
= 1,034,037/17,233,953 × 100
= 0.06 × 100
= 6%
This implies that the semi annual market interest rate is 6%.
Since we are told to calculate the market annual rate of interest on the bonds, we multiply the value of 6% by 2 since 12 months make a year and we used 6 months for the calculation above which is semi annual. This will be:
= 6% × 2
= 12%
Therefore, the market annual rate of interest on the bonds is 12%
