1-13 all parts Compute index-number trend percents for the following accounts, using Year 1 as the base year.State whether the situation as revealed by the trends appears to be favorable or unfavorable.EXERCISE 1-11Computing TrendYear 5Year 4Year 3Year 2Year 1PercentsSales......$283,880129,20019,100$271,800123,08018,300$253,680116,28017,400$235,560$151,00068,00010,000Cost of goods sold...107,44016,200Accounts receivableCRECKCompute the percent of increase or decrease for each of the following account balances:EXERCISE 1-12Year 2Year 1Computing PercentChanges1-3Short-term investments ...... $217,800Accounts receivable ....Notes payable ....$165,00042,12057,00048,000Compute the present value for each of the following bonds:EXERCISE 1-13Debt Valuationa. Priced at the end of its fifth year, a 10-year bond with a face value of $100 and a contract (coupon) rate of 10%per annum (payable at the end of each year) with an effective (required) interest rate of 14% per annum.b. Priced at the beginning of its 10th year, a 14-year bond with a face value of $1,000 and a contract (coupon) rateof 8% per annum (payable at the end of each year) with an effective (required) interest rate of 6% per annum.c. What is the answer to b if bond interest is payable in equal semiannual amounts?(annual interest)On January 1, Year 1, you are considering the purchase of $10,000 of Colin Company's 8% bonds. Thebonds are due in 10 years, with interest payable semiannually on June 30 and effective December 31.Based on your analysis of Colin, you determine that a 6% (required) interest rate is appropriate.EXERCISE 1-14Valuation of Bonds(semiannual interest)Required:

Answered: Compute the present value for each of…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter10: Stockholder's Equity

Section: Chapter Questions

Problem 88PSA: Ratio Analysis Consider the following information taken from the stockholders equity section: How do...

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1-13 all parts

Compute index-number trend percents for the following accounts, using Year 1 as the base year.
State whether the situation as revealed by the trends appears to be favorable or unfavorable.
EXERCISE 1-11
Computing Trend
Year 5
Year 4
Year 3
Year 2
Year 1
Percents
Sales......
$283,880
129,200
19,100
$271,800
123,080
18,300
$253,680
116,280
17,400
$235,560
$151,000
68,000
10,000
Cost of goods sold...
107,440
16,200
Accounts receivable
CRECK
Compute the percent of increase or decrease for each of the following account balances:
EXERCISE 1-12
Year 2
Year 1
Computing Percent
Changes
1-3
Short-term investments ...... $217,800
Accounts receivable ....
Notes payable ....
$165,000
42,120
57,000
48,000
Compute the present value for each of the following bonds:
EXERCISE 1-13
Debt Valuation
a. Priced at the end of its fifth year, a 10-year bond with a face value of $100 and a contract (coupon) rate of 10%
per annum (payable at the end of each year) with an effective (required) interest rate of 14% per annum.
b. Priced at the beginning of its 10th year, a 14-year bond with a face value of $1,000 and a contract (coupon) rate
of 8% per annum (payable at the end of each year) with an effective (required) interest rate of 6% per annum.
c. What is the answer to b if bond interest is payable in equal semiannual amounts?
(annual interest)
On January 1, Year 1, you are considering the purchase of $10,000 of Colin Company's 8% bonds. The
bonds are due in 10 years, with interest payable semiannually on June 30 and effective December 31.
Based on your analysis of Colin, you determine that a 6% (required) interest rate is appropriate.
EXERCISE 1-14
Valuation of Bonds
(semiannual interest)
Required:

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Step 1

A bond is a financial instrument issued by large business organizations and governments to raise debt funds for a long-term period. The issuer of a bond shall be liable to pay periodic coupon payments as per the agreed coupon rate.

The intrinsic value of a financial instrument represents a sum of the present value of future cash flows expected from that instrument. Therefore, the bond price at any given time represents a sum of present value of future cash flows expected from the bond.

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