Common approach to developing proforma financial statements

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Reference no: EM131991988

1. The most common approach to developing proforma financial statements is called the:

A. Cash Budget Method

B. Financial Planing method

C. Seasonality approach

D. Percent-of-sales method

E. Market-oriented approach

F. None of the above

2. Florence Inc. issued 8,000, 5-year convertible bonds of $2,000 each for $4,000,000 at the beginning of 2012. The bonds have a stated rate of interest of 9% and interest is payable annually. Each bond can be convertible into 100 shares with a par value of $10. The market rate of similar nonconvertible debt is 10%.

Determine the fair value of equity component using the “with-and-without” method.

$3,848,288

$1,365,688

$2,483,600

$151,712

Reference no: EM131991988

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