On January 2, Year 1, the ABC Inc. a private-held company whose fiscal year end is December 31, issued $2,200,000, five-year, 12% of bonds, dated January 2, Year 1. The bonds provided for semiannual interest payments to be made on June 30 and December 31 of each year. The bond comes with a call option which allows ABC to call back at 102 after one year. The bonds were issued when the market interest rate was 8%.

● ABC uses the effective interest method for amortizing bond discounts and premiums.

● The company called the bonds at 102 on June 30, Year 2.

Present Value Factors

PV of $1 at 12% for 5 periods                                                          0.5674

PV of $1 at 6% for 10 periods                                                          0.5584

PV of $1 at 4% for 10 Periods                                                          0.6756

PV of an annuity of $1 at 12% for 5 periods                                     3.6048

PV of an annuity of $1 at 6% for 10 periods                                     7.3601

PV of an annuity of $1 at 4% for 10 periods                                     8.1109

Required:

Please prepare the bond amortization table for the original ABC bond which issued 1/2/Year 1.

Please calculate the gain or loss on the early retirement of the bond.

Given the information:

Cash inflows: $500,000 per year for indefinite year;

Cash costs: 72% of sales

Initial investment: $475,000

Tax rate: 34%

Unlevered required rate of return = 20%

It is assumed that the firm finances 25% of the investment by debt (interest rate of 10%) and the remaining by equity.

Required:

Calculate the value of project using:

(a) APV;

(b) FTE; and

(c) WACC approaches.

Hampton Industries had $71,000 in cash at year-end 2018 and $22,000 in cash at year-end 2019. The firm invested in property, plant, and equipment totaling $280,000 — the majority having a useful life greater than 20 years and falling under the alternative depreciation system. Cash flow from financing activities totaled +$240,000. Round your answers to the nearest dollar, if necessary.

1. What was the cash flow from operating activities? Cash outflow, if any, should be indicated by a minus sign.

   $  

2. If accruals increased by $20,000, receivables and inventories increased by $155,000, and depreciation and amortization totaled $9,000, what was the firm's net income?

   $  

On July 1, Year 1, Danzer Industries Inc. issued $40,000,000 of 10-year, 7% bonds at a market (effective) interest rate of 8%, receiving cash of $37,282,062. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1. 2. Journalize the entries to record the following:* a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.) b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.) 3. Determine the total interest expense for Year 1. 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? 5. Compute the price of $37,282,062 received for the bonds by using the present value tables. (Round to the nearest dollar.) *Refer to the Chart of Accounts for exact wording of account titles.

You took a 30-year $750k mortgage that charges 3% interest per year. What percent of the mortgage had you paid off at midpoint, i.e., after making your 180th monthly payment?

Mullineaux Co. issued 11-year bonds one year ago at a coupon rate of 8.6 percent. The bonds make semiannual payments. If the YTM on these bonds is 7.5 percent, what is the current bond price?

Given the following information:

Other information:

• The manufacturer uses FIFO.
• All Variable costs are direct costs

Required:

1. Prepare an income statement for the Current Year based on Variable Costing.

2. Prepare an income statement for the Current Year based on Absorption Costing.

3. Reconcile the difference in Net Income between Variable Costing and Absorption Costing for the current year.

4. Near the very end of the fiscal year, the production manager noted that if Net Income increases by $200 they will get a big bonus. How can the production manager increase Net income using Absorption costing even though no additional units will be produced?

Rayburn Corporation has a building that it bought during year 0 for $850,000. It sold the building in year 5. During the time it held the building Rayburn depreciated it by $100,000.

What is the amount and character of the gain or loss Rayburn will recognize on the sale in each of the following alternative situations? (Loss amounts should be indicated by a minus sign. Enter NA if a situation is not applicable. Leave no answer blank. Enter zero if applicable.)

a. Rayburn receives $840,000.

Total Gain/(Loss) Recognized:

§1231 gain/loss:

b. Rayburn receives $900,000.

Total Gain/(Loss) Recognized:

§1231 gain/loss:

c. Rayburn receives $700,000.

Total Gain/(Loss) Recognized:

§1231 gain/loss:

On 3/5 this year, Dog Corporation placed in service 5 year property costing $22,000. What is the maximum depreciation available for the year assuming the company elected additional first-year depreciation but did NOT elect §179 expensing?