A pension fund purchased an office block three months ago. A company has agreed to occupy the office block nine months from now The lease agreement states that the company will rent the office block for 20 years. It is further agreed that rents will be paid half- yearly in advance and will be increased every two years at the rate of 2% per annum compound. The initial rent has been set at $60,000 per annum with the first rental payment due immediately on the date of occupation. As at the date of purchase of the office block, which of the following is the total present value of the rental income to the pension fund using a force of interest of 6% per annum? O $707,962.87 O $717,584.37 $727,918.47 $737,811.17 O $745,953.06
Q: Which of the following is not a correct statement about diversification? Most diversification benefi...
A: Meaning of Diversification It is a financial term in which the capital is allocated in such a manner...
Q: A regional infrastructure building and maintenance contractor must decide to buy a new compact horiz...
A: Inflation is referred as the rate of an increase in the prices over the time period in an economy. I...
Q: 7. Under the Equal Credit Opportunity Act (ECOA), it is unlawful to discriminate against an applican...
A: Equal Credit Opportunity Act The ECOA law is only applicable in the United States, ECOA law is enfor...
Q: What is the clientele effect and how does it impact on dividens policy for the company? If the compa...
A: What is the Clientele Effect? The clientele effect is a theory that states that different policies a...
Q: Raspusin Corp is expected to pay a $0.85 per share dividend at the end of the year (that is D1). The...
A: Solution:- Dividend Discount Model (DDM) is the equity model which computes the current value of sha...
Q: 9-16. (Weightea average cost of capital) The capital structure for the ABC Corporation is provided b...
A: Solution:- Weighted Average Cost of Capital means the average minimum return required by all the fun...
Q: value of the stock be today
A: The price of the stock is the maximum price that an investor pays on a per-share basis. It is found ...
Q: Pi, Inc. just payed a $2.35 per share dividend yesterday (that is D0). The dividend is expected to g...
A: Solution:- Dividend Discount Model (DDM) is the model which derives a formula for current value of s...
Q: Calculate the capitalized cost of a project that has an initial cost of P8,000,000 and an additional...
A: Initial Cost = P8,000,000 Additional Cost = P250,000 every 8 Year Annual operating costs = P150,000 ...
Q: If the payments "A" are made twice a year and interest is compounded annually for "n" years, name th...
A: Annuity refers to periodic payments made at regular intervals. The amounts paid are equal in size.
Q: Ten years ago you borrowed $300,000 to finance the purchase of a $350,000 house. The interest rate o...
A: Let's find the initial monthly payment first. Let X = Initial monthly payment Initial loan (L) = $30...
Q: An engineer planning for retirement is considering purchasing a savings bond with a face value of $5...
A: An investor purchases an asset if the current value of asset is more than the purchase price. Curren...
Q: Ecolap Inc. (ECL) recently paid a $0.46 dividend. The dividend is expected to grow at a 14.5 percent...
A: Dividend discount model With required/expected return on equity (r), current dividend (D) and consta...
Q: To purchase a specialty guitar for his band, for the last three years JJ Morrison has made payments ...
A: Monthly saving is $92 Time period is 3 years Interest rate is 4.87% compounded monthly Interest rate...
Q: Taylor Company has a cash balance of Php 7,500 on April 1. The company must maintain a minimum cash ...
A: Borrowings are the loan which is taken by the individual to meet its financial requirements. The mor...
Q: There is a bank account with a balance of $5,000 and a growth rate of 2.5% per year. How much money ...
A: Here, Initial balance = $5,000 Growth rate = 2.5% per year Time = 5 years To Find: Amount after 5 ye...
Q: Invest in any or all of the four projects whose relevant cash flows are given in the following table...
A: Hi, since you have posted a question with multiple sub-parts, we will answer the first three sub-par...
Q: a)Calculate Jane’s current retirement account balance on her 45th birthday. b)Based on your answer ...
A: Since you have asked a multiple sub part question, we will answer the first three subparts for you. ...
Q: A construction company agreed to lease payments of $427.14 on construction equipment to be made at t...
A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for yo...
Q: If an investment of P750,000 that matures in 15 years but with certain specification that P 500000 w...
A: Here, Present value (PV) = P500,000 Earns half of 1% paid semi-annual for 5 years Rate = 1%/2 = 0.5%...
Q: Assume a selling price of $88,000, a down payment of $24,000, and a mortgage at 13% for 30 years. If...
A: First, we will compute the monthly payment to pay off the loan. then we will compare the total payme...
Q: Assuming that revenues stayed flat (meaning the company did not try to increase sales by the 12 perc...
A: Profit depends on the expenses and if expenses decreases the profit will increase but if expenses in...
Q: Black ives in Mantoba, a non-participating province that has an 7% provincial sales tax During the c...
A: Government charges the GST on goods purchased to increase the collection from taxes but rate of GST ...
Q: What payment is required at the end of each year for 8 years to repay a loan of $2,580.00 at 5% comp...
A: Payment per period can be calculated using PMT function in excel. PMT(rate, nper, pv, [fv], [type]...
Q: 10.) Which one is the contractual equation for buying an FRA? a.) Loan with maturity t2 plus Deposit...
A: Forward rate agreement: It is a financial contract and a forward contract on the interest rate in ...
Q: . Nonconstant growth stock s companies evolve, certain factors can drive sudden growth. This may lea...
A: Dividend yield It is referred to as the ratio which shows how much a company pays out in dividends e...
Q: Return on equity is: the rate of return that owners earn on their investment O the relationship of s...
A: Return on equity can be defined as the earning on the equity as hold by the equity shareholders of t...
Q: which of the below does not qualify a bond ? a. Time to maturity b. Par Value c. Coupon rate d. Yie...
A: Bonds are a sort of financial instrument used by governments and enterprises to raise funding from t...
Q: A purchased a small condominium. He paid P350,000 as a down payment and agreed to pay P35,000 every ...
A: Down payment = P350,000 Quarterly payment = P35000 Interest rate = 12% Quarterly interest rate = 12%...
Q: r=0% on deposits. Consumer needs to borrow $50 loan and the consumer has uncertain income of y=50,80...
A: Expected return Expected return is the sum of all returns times the associated probability. It is ca...
Q: This plant design, entitled “IIVSDROP: The First Ear Dropper Solution Manufacturing Plant in the Phi...
A: Initial Cost = PHP 550,320,000 Other Cost = PHP 27,000,000 Time Period = 30 Years Rate of return = 2...
Q: A lease valued at $40,000 requires payments of S5000 every three months. If the first payment is due...
A: Solution:- When an equal amount is made starting from the beginning of next period, it is called as ...
Q: A firm borrows 2000 for 6 years at 8%. at the end of 6 years, it renews the loan for the amount due ...
A: A loan is an amount borrowed on which a certain interest is to be paid. The lumpsum due is computed ...
Q: Compute the NPV statistic for Project U if the appropriate cost of capital is 10 percent. (Do not ro...
A: Time Cash flow 0 -1000 1 350 2 1480 3 -520 4 300 5 -100 Cost of capital = 10%
Q: A young couple has decided to make advance plans for financing their 5 year old daughter’s college e...
A: Number of deposits (n) = 10 First deposit one year after today r = 3% Let the annual deposit = A Wit...
Q: DRAW CASH FLOW DIAGRAM A manufacturing plant installed a new boiler at a cost of P150, 000 and estim...
A: The net amount of cash and cash equivalents being transferred in and out of a company is referred to...
Q: The rate of return on T-bills is 3.25% and the expected return on the market is 9.50%. J&X, Inc. had...
A: The risk-free rate of return is the ideal rate of return on a risk-free investment. In principle, th...
Q: How much is the investor willing to pay for the bond
A: A bond is defined as the financial instrument that is used to raise capital from the market at a sta...
Q: You are trying to decide which of the two automobiles to buy. The first is American-made costs $1428...
A: Data given:: Cost of 1st car = $14288 (American-made) Mileage of 1st car = 27 miles...
Q: An engineer invests $5000 at the end of every year for a 25 year career. If the engineer wants $2mil...
A: The interest rate earned in investment The amount of interest earned from assets that pay the holde...
Q: f 2015, Toronto Dominion Bank (TD) stock cost $45 per share and was expected to yield 4% per year in...
A: Dividend yield is dividend received on the price of stock and and total dividend received is depende...
Q: You are considering the purchase of CJ, Inc. bonds that mature in 13 years, and have a 4.75% coupon ...
A: Time to maturity is 13 years Coupon rate is 4.75% Par value is $1,000 Yield to maturity is 4.45% To ...
Q: Mr. Lee purchased a small condominium. He paid P350,000 as down payment and agreed to pay P35,000 ev...
A: Down payment (DP) = P350,000 Quarterly payment (P) = P35,000 Period = 5 years Number of quarterly pa...
Q: A client interested in protecting a loved one's elegibility for government benefits, but also enhanc...
A: Compensation plan is a plan which helps in providing the benefits and increases the employees satisf...
Q: Jun has decided to save money roughly P25 per week. Suppose he makes weekly deposits of this money i...
A: Compounding is also termed as an interest on interest which means that a company calculates interest...
Q: For a one year bond of $2,300 at a simple interest rate of 10% per year, find the semiannual interes...
A: Bonds: Bonds are the liabilities of the company which is issued to raise the funds required to finan...
Q: During the month of February, direct labor cost totaled PhP650,000 and direct labor cost was 40% of ...
A: Answer - Calculation of manufacturing overhead - Direct labor cost total = 650,000 Its equal prime...
Q: Anita put up a bank account with an initial deposit of 25, 000. After six months, she deposited thre...
A: Simple interest is applied directly on the principal amount. The formula for calculating simple inte...
Q: interest rate on a 3-year treasury note is 2.75%, and 6-year notes are yielding 3.50%. Based on the ...
A: According to the expectation theory short term interest would be on the basis of long term interest ...
Q: The instrument in figure 2 exchanges cash flows with differen ..characteristics a.) Currency b.) Vol...
A: The cash flow refers to the net amount of cash and cash equivalents that are transferred in and out ...
Step by step
Solved in 2 steps with 1 images
- Using the information provided, what transaction represents the best application of the present value of an annuity due of $1? A. Falcon Products leases an office building for 8 years with annual lease payments of $100,000 to be made at the beginning of each year. B. Compass, Inc., signs a note of $32,000, which requires the company to pay back the principal plus interest in four years. C. Bahwat Company plans to deposit a lump sum of $100.000 for the construction of a solar farm In 4 years. D. NYC Industries leases a car for 4 yearly annual lease payments of $12,000, where payments are made at the end of each year.Scrimiger Paints wants to upgrade its machinery and on September 20 takes out a loan from the bank in the amount of $500,000. The terms of the loan are 2.9% annual interest rate and payable in 8 months. Interest is due in equal payments each month. Compute the interest expense due each month. Show the journal entry to recognize the interest payment on October 20, and the entry for payment of the short-term note and final interest payment on May 20. Round to the nearest cent if required.On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring payments of 10,000 at the beginning of each year. The machine cost 40,000 and has a useful life of 8 years with no residual value. Kerns implicit interest rate is 10%, and present value factors are as follows: Present value for an annuity due of 1 at 10% for 6 periods4.791 Present value for an annuity due of 1 at 10% for 8 periods5.868 Kern appropriately recorded the lease as a sales-type lease. At the inception of the lease, the Lease Receivable account balance should be: a. 60,000 b. 58,680 c. 48,000 d. 47,910
- Homeland Plus specializes in home goods and accessories. In order for the company to expand its business, the company takes out a long-term loan in the amount of $650,000. Assume that any loans are created on January 1. The terms of the loan include a periodic payment plan, where interest payments are accumulated each year but are only computed against the outstanding principal balance during that current period. The annual interest rate is 8.5%. Each year on December 31, the company pays down the principal balance by $80,000. This payment is considered part of the outstanding principal balance when computing the interest accumulation that also occurs on December 31 of that year. A. Determine the outstanding principal balance on December 31 of the first year that is computed for interest. B. Compute the interest accrued on December 31 of the first year. C. Make a journal entry to record interest accumulated during the first year, but not paid as of December 31 of that first year.Grummet Company is acquiring a new wood lathe with a cash purchase price of $80,000. The Wood Master Industries (the manufacturer) has agreed to accept $23,500 at the end of each of the next 4 years. Based on this deal, how much interest will Grummet pay over the life of the loan? A. $94,000 B. $80,000 C. $23,500 D. $14,000McMasters Inc. specializes in BBQ accessories. In order for the company to expand its business, they take out a long-term loan in the amount of $800,000. Assume that any loans are created on January 1. The terms of the loan include a periodic payment plan, where interest payments are accumulated each year but are only computed against the outstanding principal balance during that current period. The annual interest rate is 9%. Each year on December 31, the company pays down the principal balance by $50,000. This payment is considered part of the outstanding principal balance when computing the interest accumulation that also occurs on December 31 of that year. A. Determine the outstanding principal balance on December 31 of the first year that is computed for interest. B. Compute the interest accrued on December 31 of the first year. C. Make a journal entry to record interest accumulated during the first year, but not paid as of December 31 of that first year.
- Pickles R Us is a pickle farm located in the Northeast. The following transactions take place: A. On November 6, Pickles borrows $820,000 from a bank to cover the initial cost of expansion. Terms of the loan are payment due in six months from November 6, and annual interest rate of 3%. B. On December 12, Pickles borrows an additional $200,000 with payment due in three months from December 12, and an annual interest rate of 10%. C. Pickles pays its accounts in full on March 12, for the December 12 loan, and on May 6 for the November 6 loan. Record the journal entries to recognize the initial borrowings, and the two payments for Pickles.For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A. A patent with a seventeen-year remaining legal life was purchased for $850,000. The patent will be usable for another six years. B. A patent was acquired on a new tablet. The cost of the patent itself was only $12,000, but the market value of the patent is $150,000. The company expects to be able to use this patent for all twenty years of its life.On January 1, 2019, Mopps Corp. agrees to provide Conklin Company 3 years of cleaning and janitorial services. The contract sets the price at 12,000 per year, which is the normal standalone price that Mopps charges. On December 31, 2020, Mopps and Conklin agree to modify the contract. Mopps reduces the fee for the third year to 10,000, and Conklin agrees to a 4-year extension that will extend services through December 31, 2024, at a price of 15,000 per year. At the time that the contract is modified, Mopps is charging other customers 13,500 for the cleaning and janitorial service. Required: Should Mopps and Conklin treat the modification as a separate contract? If so how should Mopps account for the contract modification on December 31, 2020? Support your opinion by discussing the application to this case of the factors that need to be considered for determining the accounting for contract modifications.
- Halep Inc. borrowed $30,000 from Davis Bank and signed a 4-year note payable stating the interest rate was 4% compounded annually. Halep Inc. will make payments of $8,264.70 at the end of each year. Prepare an amortization table showing the principal and interest in each payment.On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million. The promise to transfer the warehouse is determined to be a performance obligation. The contract states that if the warehouse is usable by November 30, 2019, Elkhart will receive a bonus of 600,000. For every week after November 30 that the warehouse is not usable, the bonus will decrease by 150,000. Elkhart provides the following completion schedule: Required: 1. Assume that Elkhart uses the expected value approach. What amount should Elkhart use for the transaction price? 2. Assume that Elkhart uses the most likely amount approach. What amount should Elkhart use for the transaction price? 3. Next Level What is the purpose of assessing whether a constraint on the variable consideration exists?Al-Awael Islamic Bank purchased warehouses for an amount of 150,000 dinars on 12-25-2018 in cash from joint investment account funds to rent them to the client Khaled, under the following conditions: The lease period is ten years, starting from January 1, 2019§ The rent is paid in equal monthly installments, and the bank assigns the warehouses at the end of the period without any compensation. The bank's profit rate is 5% annually§ The monthly rent for a similar warehouse is estimated at 1,600 dinarsThe amount of Islamic insurance on the warehouses was 50,000 dinarsSuppose that in the third year, some of the internal water pipes of the stores were repaired for 50 dinars, and the front entrance to the stores was expanded for 200 dinars. In your opinion, who will bear these expenses? Suppose that in the fifth year, the refrigeration equipment was completely damaged due to a fire that destroyed the warehouses and became unusable, and the insurance company paid the full amount. In your…