Business, 17.01.2020 05:31 raul2372

On the last day of its fiscal year ending december 31, 2018, the sedgwick & reams (s& r) glass company completed two financing arrangements. the funds provided by these initiatives will allow the company to expand its operations. (fv of $1, pv of $1, fva of $1, pva of $1, fvad of $1 and pvad of $1) (use appropriate factor(s) from the tables provided.)1. s& r issued 9% stated rate bonds with a face amount of $100 million. the bonds mature on december 31, 2036 (20 years). the market rate of interest for similar bond issues was 10% (5.0% semiannual rate). interest is paid semiannually (4.5%) on june 30 and december 31, beginning on june 30, 2019.2. the company leased two manufacturing facilities. lease a requires 20 annual lease payments of $210,000 beginning on january 1, 2019. lease b also is for 20 years, beginning january 1, 2019. terms of the lease require 17 annual lease payments of $230,000 beginning on january 1, 2022. generally accepted accounting principles require both leases to be recorded as liabilities for the present value of the scheduled payments. assume that an 11% interest rate properly reflects the time value of money for the lease obligations. required: what amounts will appear in s& r's december 31, 2018, balance sheet for the bonds and for the leases? (enter your answers in whole dollars. do not round intermediate calculations. round your final answers to nearest whole dollar amount.)

Answers: 2

Show answers

Answers

Answer from: issa82

Bonds payable (net) 91,491,479.66

Lease Liaiblity 3,255,489.77

Explanation:

We need to solve for the carrying value of the bonds at december 31th:

Which is the present value of the coupon payment and maturity.

COUPON PAYMENT (ANNUITY)

$C \times \frac{1-(1+r)^{-time} }{rate} = PV\\$

C4,500,000.00

time39

rate0.5

$4500000 \times \frac{1-(1+0.5)^{-39} }{0.5} = PV\\$

PV$8,999,998.7791

MATURITY (LUMP SUM)

$\frac{Maturity}{(1 + rate)^{time} } = PV$

Maturity 100,000,000.00

time 39.00

rate 0.05000

$\frac{100000000}{(1 + 0.05)^{39} } = PV$

PV 14,914,796.6415

PV c$76,576,683.0226

PV m $14,914,796.6415

Total$91,491,479.6642

2. The company leased two manufacturing facilities. Lease A requires 20 annual lease payments of $210,000 beginning on January 1, 2019. Lease B also is for 20 years, beginning January 1, 2019. Terms of the lease require 17 annual lease payments of $230,000 beginning on January 1, 2022. Generally accepted accounting principles require both leases to be recorded as liabilities for the present value of the scheduled payments. Assume that an 11% interest rate properly reflects the time value of money for the lease obligations

The lease are annuity-due as payment are at the beginning.

$C \times \frac{1-(1+r)^{-time} }{rate} (1+rate)= PV\\$

C210,000.00

time19

rate0.11

$210000 \times \frac{1-(1+0.11)^{-19} }{0.11}(1+0.11) = PV\\$

PV$1,827,339.4804

We first calculate the present value of the annuity due:

$C \times \frac{1-(1+r)^{-time} }{rate} = PV\\$

C210,000.00

time17

rate0.11

$210000 \times \frac{1-(1+0.11)^{-17} }{0.11} = PV\\$

PV$1,759,623.9738

Then, as payment beginning on 2022 we discount for an additional two years:

$\frac{Maturity}{(1 + rate)^{time} } = PV$

Maturity 1,759,623.97

time 2.00

rate 0.11000

$\frac{1759623.97382009}{(1 + 0.11)^{2} } = PV$

PV 1,428,150.2912

Total lease liability: 1,827,339.48 + 1,428,150.29 = 3,255,489.77

Answer from: Quest

the answer is "b.the increased supply will create a surplus. "

the essential thought behind price controls is straightforward - utilize the power of law to modify the equilibrium of a market. for instance, the legislature may choose that the steel business needs to survive, and in this way pass a law to set a value floor on steel. this implies all steel sold must offer at or over the floor value, which must be set over the equilibrium cost for it to have any impact. the switch could likewise happen - the administration can choose that steel is excessively costly and set a value roof underneath its equilibrium value, with the goal that all steel must be sold at or beneath that ceiling.

Answer from: Quest

Answerlistening;

Other questions on the subject: Business

Business, 21.06.2019 21:00, hollie52

The market price of cheeseburgers in a college town increased recently, and the students in an economics class are debating the cause of the price increase. some students suggest that the price increased because the price of beef, an important ingredient for making cheeseburgers, has increased. other students attribute the increase in the price of cheeseburgers to a recent increase in college student enrollment.1. the first group of students thinks the increase in the price of cheeseburgers is due to the fact that the price of beef, an important ingredient for making cheeseburgers, has increased. (what happened to demand and supply, shift to the right or left)2. the second group of students attributes the increase in the price of cheeseburgers to the increase in college student enrollment. (what happens to demand and supply, shift to the right or left)3. suppose that both of the events you analyzed above are partly responsible for the increase in the price of cheeseburgers. based on your analysis of the explanations offered by the two groups of students, how would you figure out which of the possible causes was the dominant cause of the increase in the price of cheeseburgers? (choose a, b, c, or d)a)if the price increase was small, then the supply shift in the market for cheeseburgers must have been larger than the demand shift. b)if the equilibrium quantity of cheeseburgers decreases, then the demand shift in the market for cheeseburgers must have been larger than the supply shift. c)if the equilibrium quantity of cheeseburgers decreases, then the supply shift in the market for cheeseburgers must have been larger than the demand shift. d)whichever change occurred first must have been the primary cause of the change in the price of cheeseburgers.

Answers: 2

continue

Business, 21.06.2019 23:20, pwolfiimp4

Which feature transfers a slide show into a word-processing document?

Answers: 2

continue

Business, 22.06.2019 01:00, reagriffis24

How does the economy of cuba differ from the economy of north korea? in north korea, the government’s control of the economy has begun to loosen. in cuba, the government maintains a tight hold over the economy. in cuba, the government’s control of the economy has begun to loosen. in north korea, the government maintains a tight hold over the economy. in north korea, there is economic uncertainty in exchange for individual choice. in cuba, there is economic security in exchange for government control. in cuba, there is economic uncertainty in exchange for individual choice. in north korea, there is economic security in exchange for government control.\

Answers: 2

continue

Business, 22.06.2019 12:30, chycooper101

Rossdale co. stock currently sells for $68.91 per share and has a beta of 0.88. the market risk premium is 7.10 percent and the risk-free rate is 2.91 percent annually. the company just paid a dividend of $3.57 per share, which it has pledged to increase at an annual rate of 3.25 percent indefinitely. what is your best estimate of the company's cost of equity?

Answers: 1

continue

You know the right answer?

On the last day of its fiscal year ending december 31, 2018, the sedgwick & reams (s& r) gl...