How do you determine the appropriate cost of debt for a company? Does it make a difference if the company’s debt is privately placed as opposed to being publicly traded? How would you estimate the cost of debt for a…
ABC Electronics is considering an investment that will have cash flows of $16,000, $5,000 and $4,000 for years 1 through 3. What is the approximate value of this investment today if the appropriate discount rate is 9% per year?
Chavez Corporation has 50,000 shares of common stock outstanding. It declares a $1 per share cash dividend on November 1 to stockholders of record on December 1.The dividend is paid on December 31. Prepare the entries on the appropriate dates…
The Feldwyn Company is using a machine whose original cost was $72,000. The machine is two years old and has a current market value of $16,000. The asset is being depreciated over a 12 year original life toward a zero…
Have you ever found yourself in a relationship (perhaps at work) where you undermined your own power currency? When someone else recognized your level of power or your RICE, what attributes became apparent? What can you do to develop your…
This problem concerns some extensions of the M-M theory. The M-M theorem assumes that the firm has only two classes of securities, perpetual debt and equity. Suppose that the firm has issued a third class of securities – preferred stock…
You are the controller for ABC Company, and your company has just had its initial transaction in an area entirely new to the company. Provide a list of the steps you would undertake in order to decide on the appropriate…
Hayes Company signs a five-year non-cancelable lease with Lester Company on January 1, 2008, when the lease begins. The lease calls for five payments of $79,139 to be made at the beginning of each year. The leased asset has a…
On January 1, 2013, Salvatore Company leased several machines from Nola Corporation under a three-year OPERATING lease agreement. The lease calls for semiannual payments of $15,000 each, payable on June 30 and December 31 of each year. The machines were…
On January 1, 2011, Wildcat Company purchased $93000 of 10% bonds at face value. The bonds are to be held to maturity. The bonds pay interest semiannually on January 1 and July 1. Prepare the appropriate journal entry to record…
