1.)Daniel\'s Corp. sells $100,000 of bonds to private investors. The bonds are d
ID: 2743397 • Letter: 1
Question
1.)Daniel's Corp. sells $100,000 of bonds to private investors. The bonds are due in five years, have an 6% coupon rate, and interest is paid semiannually. The bonds were sold to yield 8%. What proceeds does Lowell receive from the investors? A. $100,000 B. $112,000 C. $91,889 D. $108,530 E. None of the above
2.)In May 2011, Delaware Inc. announced a 6-for-2 stock split. On the split date, Cerner had about 80 million shares outstanding. After the split the number of shares outstanding was:
240 million
120 million
60 million
30 million
None of the above
3.)
Which of the following represents a current liability?
Accrual of taxes payable
Long-term loan
Short-term securities
Bond issue
None of the above
A.240 million
B.120 million
C.60 million
D.30 million
E.None of the above
Explanation / Answer
1. The correct answer: C. $ 91,889
Present value of the bonds = Stated semi-annual interest x PVIFA 4%, 10 years + Maturity amount x PVIF 4%, 10 years = $ 3,000 x 8.1109 + 100,000 x 0.6756 = $ 91,890
2. The correct option: A. $ 240 million
80 / 2 x 6 = 240
3. The correct option: A. Accrual of taxes payable
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