Hypothetical jet purchaseassume that fedex will finance its

Reference no: EM13600681

Hypothetical Jet Purchase:Assume that FedEx will finance its first four 777F aircraft with Boeing Capital Corporation.Assume that FedEx paid a deposit of $94 million upon signing the sales contract with Boeing's Commercial Aircraft division (the division that manufactures and sells the 777F). The sales contract indicates a price of $940 million for the four aircraft ($235 per aircraft). Upon delivery of the four aircraft, FedEx will execute a note payable to Boeing Capital with the following terms:

1. The face value of the note is $846 million (the $940 million less the $94 million deposit);

2. The interest rate stated in the note is 8% per year, which is the same rate as FedEx's incremental borrowing rate;

3. FedEx will make five installment payments, each on the annual anniversary of the note's inception. These installment payments will simultaneously pay the accrued interest for the year and reduce the principal to zero after the fifth payment.

Assume that on the note's second anniversary the estimated market yield for notes of similar risk as the FedEx note had increased to 10% per year. Using the first of the two hypothetical scenarios from the class presentation assignments, determine the fair market value of the note as of its second anniversary.

Reference no: EM13600681

Questions Cloud

Prepare journal entries to record the following : prepare journal entries to record the following merchandising transactions of bask company which applies the perpetual

Use the following information to prepare the july cash : use the following information to prepare the july cash budget for anker co. it should show expected cash receipts and

If the sales manager receives a bonus of 20 cents for each : novelties inc produces and sells highly faddish products directed towards the preteen market. a new product has come

During the current period department a finished and : during the current period department a finished and transferred 50000 units to department b. of the 50000 units 20000

Hypothetical jet purchaseassume that fedex will finance its : hypothetical jet purchaseassume that fedex will finance its first four 777f aircraft with boeing capital

Tim dye the cfo of blackwell automotive inc is putting : tim dye the cfo of blackwell automotive inc. is putting together this years financial statements. he has gathered the

On january 8 the end of the first weekly pay period of the : on january 8 the end of the first weekly pay period of the year regal companys payroll register showed that that its

For 2010 omaha mechanical has a monthly overhead cost : for 2010 omaha mechanical has a monthly overhead cost formula of 42900 6 per direct labor hour. th e firms 2010

Farris corporation produces a single product the following : farris corporation produces a single product. the following is a cost structure applied to its first year of

User Account

All Pages