Compute the net interest expense to be reported

Assignment Help Financial Management

Reference no: EM131551114

On January 2, 2014, Parton Company issues a 5-year, $12,085,000 note at LIBOR, with interest paid annually. The variable rate is reset at the end of each year. The LIBOR rate for the first year is 5.8%.

Parton Company decides it prefers fixed-rate financing and wants to lock in a rate of 6%. As a result, Parton enters into an interest rate swap to pay 6% fixed and receive LIBOR based on $12,085,000. The variable rate is reset to 6.5% on January 2, 2015.

(a) Compute the net interest expense to be reported for this note and related swap transactions as of December 31, 2014. Net interest expense December 31, 2014

(b) Compute the net interest expense to be reported for this note and related swap transactions as of December 31, 2015. Net interest expense December 31, 2015

Reference no: EM131551114

Questions Cloud

Calculate the stock expected return : Below average 0.2 -6 Average 0.4 17 Above average 0.2 20 Strong 0.1 50 1.0 Calculate the stock's expected return.

What would aftertax cost of debt be : what would the aftertax cost of debt be, based on their cost last year and the 20 percent increase?

What is the required rate of return on portfolio consisting : What is the required rate of return on a portfolio consisting of 80% of Stock X and 20% of Stock Y?

What will be your? price-earnings ratio after the merger : What will be your? price-earnings ratio after the merger? (if you pay no? premium)? How does this compare to your? P/E ratio before the? merger?

Compute the net interest expense to be reported : Compute the net interest expense to be reported for this note and related swap transactions as of December 31, 2014.

What is standard deviation of the portfolio : If the correlation between the returns of Security F and Security G is .30, what is the standard deviation of the portfolio?

What is an estimate of brandtly price per share : Brandtly does not pay any dividends, and it has no plans to pay dividends in the near future. What is an estimate of Brandtly's price per share?

What is projects modified internal rate of return : what is the projects modified internal rate of return? Should the firm purchase the project?

What is the market value of the company stock : Burnes, Inc. is a mature firm that is growing at a constant rate of 5.5 percent per year. what is the market value of the company's stock?

User Account

All Pages