corporate bond offering 10%, muncipal hand offering 7% interest with other conditions remaining the same, which one is a investment1 Assume your is 20% better tax bracket 2 what are the limitations financial statements and financial ratio analyses 2.
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- Bats Corporation issued 800,000 of 12% face value bonds for 851,705.70. The bonds were dated and issued on April 1, 2019, are due March 31, 2023, and pay interest semiannually on September 30 and March 31. Bats sold the bonds to yield 10%. Required: 1. Prepare a bond interest expense and premium amortization schedule using the straight-line method. 2. Prepare a bond interest expense and premium amortization schedule using the effective interest method. 3. Prepare any adjusting entries for the end of the fiscal year, December 31, 2019, using the: a. straight-line method of amortization b. effective interest method of amortization 4. Assume the company retires the bonds on June 30, 2020, at 103 plus accrued interest. Prepare the journal entries to record the bond retirement using the: a. straight-line method of amortization b. effective interest method of amortizationA conversion of a face value $1 million convertible bond for $1 million of common stock would most likely be: B . reported as a $1 million fi nancing cash outfl ow and infl ow.Alternative Financing Plans Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $1,760,000 $880,000 Issue preferred $1 stock, $10 par — 1,460,000 Issue common stock, $5 par 1,760,000 1,180,000 Income tax is estimated at 40% of income. Determine the earnings per share on common stock, assuming that income before bond interest and income tax is $528,000. Enter answers in dollars and cents, rounding to two decimal places. Plan 1 $ Earnings per share on common stock Plan 2 $ Earnings per share on common stock
- Alternative financing plansFrey co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 5% bonds (at face value) $6,000,000 $2.000,000 Issue preferred $1 stock. $20 par - 6,000,000 Issue common stock. $25 par 6,000,000 4,000,000 Income tax is estimated at 40% of income.Determine the earnings per share of common stock, assuming thatincome before bond interest and income tax is $800,000.Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $1,600,000 $800,000 Issue preferred $1 stock, $10 par — 1,330,000 Issue common stock, $5 par 1,600,000 1,070,000 Income tax is estimated at 40% of income. Determine the earnings per share on common stock, assuming that income before bond interest and income tax is $480,000. Enter answers in dollars and cents, rounding to two decimal places. Plan 1 $ Earnings per share on common stock Plan 2 $ Earnings per share on common stockSimonelli Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 8% bonds (at face value) $5,000,000 4,000,000 Issue preferred $2.00 stock, $20 par — 2,000,000 Issue common stock, $25 par 5,000,000 4,000,000 Income tax is estimated at 40% of income. Determine the earnings per share of common stock, assuming income before bond interest and income tax is $1,000,000.
- A company issues GHS 1,000,000 12% debentures of par value of GHS 100 each. The debentures are redeemable after the expiry period of 7 years. The company is in the 35% tax bracket.Required (i)Calculate the cost of debt after tax, if debentures are issued at: • Par • 10% Discount • 10% Premium (ii) Based on the relationship between coupon interest rate and cost of debt, explain why debenture may be issued at par, discount and premium.Desmond Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $1,320,000 $660,000 Issue preferred $1 stock, $10 par — 1,100,000 Issue common stock, $5 par 1,320,000 880,000 Income tax is estimated at 40% of income. Determine the earnings per share of common stock, assuming that income before bond interest and income tax is $396,000. Enter answers in dollars and cents, rounding to two decimal places. Plan 1 Earnings ( ) per share on common stock Plan 2 Earnings ( ) per share on common stockOn 7/1, Sell 3-year, $500,000, 6% (payable 1/1 and 7/1) bonds when market rate is 8%, convertible to 25,000 CS shares. What would the journal entry be?
- Alternative Financing Plans Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 5% bonds (at face value) $6,000,000 $2,000,000 Issue preferred $1 stock, $20 par — 6,000,000 Issue common stock, $25 par 6,000,000 4,000,000 Income tax is estimated at 40% of income. Determine the earnings per share of common stock, assuming income before bond interest and income tax is $800,000. Enter answers in dollars and cents, rounding to two decimal places.A conversion of a face value $1 million convertible bond for $1 million of common stock would most likely be: A . reported as a $1 million investing cash infl ow and outfl owAssume the following yields for different bonds issued by a corporation: One - year bond: 5.50% Two - year bond: 6.00% Three-year bond: 7.00% If an on - the - run 3-year U.S. Treasury is yielding 5 percent, then what is the relative yield spread on the 3-year corporate issue? A. 1.167 B16.67% C. 14.28% D. 100 basis