Principles of Corporate Finance
13th Edition
ISBN: 9781260465099
Author: BREALEY, Richard
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Textbook Question
Chapter 24, Problem 11PS
Sinking funds For each of the following sinking funds, state whether the fund increases or decreases the
- a. An optional sinking fund operating by drawings at par.
- b. A mandatory sinking fund operating by drawings at par or by purchases in the market.
- c. A mandatory sinking fund operating by drawings at par.
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Chapter 24 Solutions
Principles of Corporate Finance
Ch. 24 - Bond terms Use Table 24.1 (but not the text) to...Ch. 24 - Bond terms Look at Table 24.1: a. The AMAT bond...Ch. 24 - Bond terms Select the most appropriate term from...Ch. 24 - Prob. 5PSCh. 24 - Bond terms Bond prices can fall either because of...Ch. 24 - Security and seniority a. As a senior bondholder,...Ch. 24 - Prob. 8PSCh. 24 - Prob. 9PSCh. 24 - Security and seniority a. Residential mortgages...Ch. 24 - Sinking funds For each of the following sinking...
Ch. 24 - Call provisions a. Look at Table 24.1. Suppose...Ch. 24 - Covenants Alpha Corp. is prohibited from issuing...Ch. 24 - Prob. 14PSCh. 24 - Private placements Explain the three principal...Ch. 24 - Convertible bonds True or false? a. Convertible...Ch. 24 - Convertible bonds Maple Aircraft has issued a 4%...Ch. 24 - Convertible bonds The Surplus Value Company had 10...Ch. 24 - Prob. 19PSCh. 24 - Convertible bonds Iota Microsystems 10%...Ch. 24 - Convertible bonds Zenco Inc. is financed by 3...Ch. 24 - Prob. 22PSCh. 24 - Prob. 23PSCh. 24 - Bank loans, commercial paper, and medium-term...Ch. 24 - Prob. 25PSCh. 24 - Tax benefits Dorlcote Milling has outstanding a 1...Ch. 24 - Convertible bonds This question illustrates that...Ch. 24 - Prob. 28PS
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- Debt service funds are used to account for which of the following? Multiple Choice Payment of only interest on general long-term debt. Payment of only principal on general long-term debt. Payment of principal and interest on general long-term debt.arrow_forwardWhat is a bond sinking fund? What is the purpose of establishing a sinking fund? Are bonds that provide for a sinking fund regarded as being risker than those without this type of provision? Explain.arrow_forwardSpecify the section of a classified balance sheet in which each of the following accounts would be found.Please tell me foll;owing the instructions above what part of the Balance Sheet and Section would these be found in1) Investment in XYZ2)Fund to Retire Bondsarrow_forward
- QUESTION 4 Which of the following fund types does not report the payment of bond principal as an expenditure? a. Special revenue fund b. Enterprise fund c. Debt service fund d. General fundarrow_forwardA sinking fund call on a bond:arrow_forward1, The establishment of a bond sinking fund is required at all times to settle bond liability. A. TRUE B.FALSE . 2. How would the amortization of premium on bonds payable affect each of the following? * a. Increase carrying value; Increase net income b. Decrease carrying value; Decrease net income c. Increase carrying value; Decrease net income d. Decrease carrying value; Increase net income . 3.The value of the warrants attached to a debt security (detachable) is accounted as: a. A separate portion of share premium b. Liability c. An appropriation of retained earnings d. A part of share capitalarrow_forward
- Fiduciary fund financial statements are prepared based on which one of the following basis of accounting? a. None of the options b. Modified accrual basis of accounting c. Cash basis of accounting d. Accrual basis of accountingarrow_forwardBond issue costs, such as printing fees, legal fees, commissions, etc. are most appropriately accounted for by a. charging them to an expense account in the year the bonds are actually sold. b. debiting them to unamortized bond issue costs, setting them as a deferred charge on the statement of financial position, and amortizing them in a manner similar to bond discount over the life of the bond. c. charging them to an expense account in the year the bonds are originally dated whether or not they are sold in that year. d. considering them in the measurement of the bonds payable.arrow_forwardProprietary fund financial statements are prepared based on which one of the following basis of accounting? a. Cash basis of accounting b. None of the options c. Modified accrual basis of accounting d. Accrual basis of accountingarrow_forward
- Which of these items related to bonds would be added back in the Operating section of the SCF under the indirect method? (check all that apply) Amortization of bond discount Loss on bond retirement Gain on bond retirement Unrealized loss on bonds under the fair value option Amortization of bond premiumarrow_forwardMatching Select the term that best fits each of the following definitions and descriptions. a. Long-term debt b. Callable bonds c. Troubled debt restructuring d. Serial bonds e. Commodity-backed bonds f. Term bonds g. Convertible bonds h. Bond indenture i. Straight-line method j. Off-balance-sheet financing k. Stated interest rate l. Bond discount m. Zero-interest bonds n. Early extinguishment of debt o. Debenture bonds p. Junk bonds q. Bearer bonds r. Registered bonds s. Bond issuance costs t. Secured bonds 32. Provides for recognition of an equal amount of premium or discount amortization each period. 33. Bonds that mature in one lump sum at a specified future date. 34. Bonds that provide for conversion into some other security at the option of the stockholder. 35. Bonds that mature in a series of installments at future dates. 36.…arrow_forwardThe City of Minden entered into the following transactions during the year 2026. 1. 2. 3. 4. 5. 6. 7. 8. 9. A bond issue was authorized by vote to provide funds for the construction of a new municipal building, which it was estimated would cost $950,000. The bonds are to be paid in 10 equal installments from a Debt Service Fund, and payments are due March 1 of each year. Any premium on the bond issue, as well as any balance of the Capital Projects Fund, is to be transferred directly to the Debt Service Fund. An advance of $78,000 was received from the General Fund to underwrite a deposit on the land contract of $125,000. The deposit was made. Bonds of $840,000 were sold for cash at 102. It was decided not to sell all the bonds because the cost of the land was less than expected. Contracts amounting to $710,000 were let to Sweet Acacia and Company, the low bidder, for construction of the municipal building. The temporary advance from the General Fund was repaid and the balance on the…arrow_forward
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