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Calculate the total borrowing cost for the company

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Q1. On January 1 year 1, a company issues 6%, 10 year $300,000 par value bonds that pay annual interest on December 31 of every year. The bonds were issued at 103. Calculate the total borrowing cost (financing cost) for the company, over the life of the bonds.

Q2. An asset's book value is $18,000 on December 31, Year 5. The asset has been depreciated at an annual rate of $3,000 on the straight-line method. Assuming the asset is sold on December 31, Year 5 for $15,000, the company should record:

a. A gain on sale of $12,000.

b. A loss on sale of $3,000.

c. A loss on sale of $12,000.

d. Neither a gain nor a loss is recognized on this transaction.

Reference no: EM132825392

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