on-october-1-a-company-sells-a-3-year-2500000-bond-with-an-8-stated-interest-rate-interest-is-paid-q

Question

On October 1 a company sells a 3-year, $\$2,500,000$ bond with an 8% stated interest rate. Interest is paid quarterly and the bond is sold at 89.35. On October 1 the company would collect ________.
A. $\$ 200,000$
B. $\$ 558,438$
C. $\$ 2,233,750$
D. $\$ 6,701,250$

Charles Carter · Accepted Answer

Okay, so, uh, this is a kind of a finance problem. Just tells us we&#x27;re gonna invest into two accounts. $24,000. So our first equation just gonna be X plus y just both accounts. He goes 24,000. It tells us the first account pays 5% our 0.35% interest. So 0.35% not percent 3.5% interest, which comes out to be the decimal 0.35 And our second account pays 5% interest. Next on my represents, how much money we&#x27;re investing in each one of those accounts. So that&#x27;s going to identify that. So X is the 3.5% account and why is the 5% count? Okay, So and the total amount of interest we want to make for some reason, is less than the maximum you could make is the maximum would be if you invested all of it in the UAE accounts. I don&#x27;t know why you want to split it up and make less, but there you have. It s o. The total amount of interest we want to make is 9 30 I&#x27;m gonna multiply top equation by 0.5 on them to help us, I work our way down to the answers we&#x27;re looking to solve for the account balance in the ex account. So I most about 0.5 because that&#x27;s gonna help us eliminate the Y values so we can just go ahead and solve for the ex account. So by multiple, about 0.5 I&#x27;ll have 0.5 x and 0.35 x. My wife values will cancel, and I&#x27;m gonna have 0.5 times 24,000 which is 1200. Uh, bottom still gonna be 9 30 Cannot wine values of just cancel. So we&#x27;re gonna have 0.15 x equals. And when we subtract this, 1200 minus 9 30 is gonna be 270. If I divide both sides by 0.15 I&#x27;ll have the axe is $18,000. So that&#x27;s how much we want to invest in that 3.5% account. Uh, if he wanted to extend this problem further, the Y value would just be 24,000 minus that which is just 6000. So I think the question Just ask for the X value. Um, so just make sure you know when you&#x27;re solving these problems, you know exactly what is asking for. Thank you very much.

Mariam Saleh-Esa · Answer

So here we&#x27;re told, an investor invest a total 25,000 to bonds and one is one pays 3% and the other 278% which is two plates and 5% basically interests of. And the mister and state son inducing 50 cents annual interest. So basically, what we have to do is create two equations, a stomach region. So we have a reckless Y is equal to 25 thousands of the two bombs. We don&#x27;t know what the price is after. You know that one bond gives us a percent off simple and just observe good 032 x plus. The 2nd 1 uses to white ate some five, which converted into a decimal, would be 0.2875 times. Why, which then gives us 787 50. So now what we do is, um, multiply both of these equations. So if we have experts, Y is equal to 25,000. So you know that zero. What if he did do minus y on both sides? So you know that X is equal to 25,000 men? It&#x27;s wet so we can substitute that we&#x27;re here. So the I have 0.3 times 25,000 minus light plus 0.2875 y is equal to 737 playing 50. So zero white 03 times 25,000 gives US 757 and 50 men a 003 Why? Plus 0.2875 Why is equal to certain and 37 when. 50. So we can add these two together. And once we do that, if I really like that here. So 750 plus, um So if you do 0.0 2875 minus 2.3 That gives us send her 50 minus airplanes. 0125 Why is equal to sound her and 37 went 50. It&#x27;s a tractor, sir. 50 from both sides. 750 minus 737. Wait 50 Gives us 12 refugees and ***. Year 00125 Why is equal to 12.5 if you do wide negative children. Five. Sophie to buy this by zero point 00125 We get $10,000 $10,000. So why is equal to $10,000? We know one of the value of bonds. So we know experts Y is equal to 25,000 Sophie input substitute with Why so? 10,000 tickle too wise. 25,000. You know that X is equal to 50,000 to the value of the two bonds are 15,000 and 10,000 and that is our answer.

Amit Srivastava · Answer

to find a solution of this question. First, we need to find the present value, which has been given by the formula integration from zero tow em yours multiple on income stream multiplied by. Here&#x27;s to minus great time on D. D. So if our present value its creator than the actual value, which is $3.5 then we&#x27;ll be buying it. Otherwise, not. So. Let us find the present value. The income stream given to us is 50,000. It&#x27;s $50,000 are not writing dollars to avoid some confusion. I&#x27;m doing that. The time given to us is or M is given to us as it years. The rate is 7% which is seven. Divide by 100 that is 0.7 So these are the values which were having let us put this into the formula on find the present value. The present value will be given by Tzeitel to it. If I&#x27;m not wrong. 50,000 multiplied by eres tu minus rate, 0.7 The time on and our duty so on integration. It&#x27;s an absolute function, so on integration will be getting it does 50,000 as a dis constant so it won&#x27;t get affected. Multiplied by it is to minus 0.7 de the white by 0.7 on the minus sign because the number here is negative. Okay, Andi, obviously the limits will go from it to zero because the limits are a to zero. Now let us compute it. 50,000 again. You&#x27;re keeping the constant separate on here. The value will be getting is points was when I&#x27;m just separating all the constants multiplied by years to minus. You know 0.7 multiplied by eight minus the years to miners you 2.7 multiplied by zero or visit the value. Here. Relitigating is one no lettuce computed further 50,000 do right by 0.7 negative, obviously multiplied by point 94 five minus one on calculation will get the mountains three black, 6000 to 79. This is the present value. What we decided was, if present value, it&#x27;s less than three lack 50,000 daughters and not writing dollars. Okay, let&#x27;s write it. If it&#x27;s problem, then we won&#x27;t be buying the company here. The amount, which is three, lack 6000 to 79. It&#x27;s less than three luck. 50 1000 right? So our answer will be that we won&#x27;t be buying the company.

Amy Jiang · Answer

Okay, so we have a bond with a face value of 10,000. So our formula for face value that is a is equal to P. Times one plus, Archie. Okay, so are face value. That is 10,000. And now our principle is at a rate of 5988.2 and then that&#x27;s for 10 years. So we ask yourself, All right, so we have 10,000 divided by 5988.2 Okay. And now was to track that by one and then divide by 10 and then we get a rates of 0.67 which is equal to 6.7%.

Md.Daniyal Arshad · Answer

So while seeing the question, let&#x27;s for the move to dance or So let&#x27;s see here that interest rate individuals obtained from bank account is 8%. And share of the stock in X. Y. Z. Corporation Is $110. And at the end of 12 and three years the stock will pay a dividend of right $5. So after three years the stock can be sold for $120 And using eight as a discount rack. So baby of inflows. Yeah is equal to fight by one plus I. To the power one plus five by one plus I. To the power to last five Plus 120 By one plus I. To the power three which is equal to fight by one place. 0.08. With the power one the last five by one plus 0.08 to the power to plus five plus 120 Into 125. Bye One plus 0.08 To the power three which is equal to four point 62 96 plus four point to a 67 99 point 22 9 0. Which is equal to 108 0.15. So here is the answer. So let&#x27;s move forward that the present worth of inflows that will be received in the stop work of inflows that will be received in the stock is brought if $108.15. But the pride of his talk is $110 which is higher then 108 $.15. So therefore that invest, maintain X. Y. Z. Corporation is not a good investment. Mhm. So how did the full definition back interested individuals obtain from bank is eight And share of his talking X. Y. That corporation is $110 at the end of 12 and three years. The stock will pay a dividend of $5. After three years. The stock can be sold for $120 Using 8% other discount racked. So here is peewee of influence is equal to five x 1 plus I. to the power one plus five by one plus I. To the power to plus five plus 120 by one plus I. To the power three which is equal to five by one plus 0.0 to the power one plus five by one plus 0.8 to the power to plus five plus 120 into 125 by one plus 0.8 to the power three which is equal to 4.6296 plus 4.2867 plus 99.22 90. Which is equal to 110.15. So the present worth of influence that will be received in the stock is proud is $108.15. But the price of the stock is $110 which is higher than $108.15. So therefore the investment in X. Y. Z. Corporation is not a good investment. So I hope you better understand the full definition and solution. So, for any further curious and doubts, I am therefore, help. So thank you.

Problem

On April 1 a company sells a 5-year, $\$60,000$ b…

Problem 8 Easy Difficulty

On October 1 a company sells a 3-year, $\$2,500,000$ bond with an 8% stated interest rate. Interest is paid quarterly and the bond is sold at 89.35. On October 1 the company would collect ________.
A. $\$ 200,000$
B. $\$ 558,438$
C. $\$ 2,233,750$
D. $\$ 6,701,250$

Answer

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Principles of Accounting Volume 1: Financial Accounting

Mitchell Franklin, Patty Graybeal, Dixon CooperPrinciples of Accounting Volume 1: Financial Accounting

Mitchell Franklin, Patty Graybeal, Dixon Cooper

Principles of Accounting Volume 1: Financial Accounting