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Assume that IBM leased equipment that was carried at a cost of $150,000 to Disney company. The term of the lease is 6 years beginning January 1, 2018, with equal rental payments of $30,677 at the beginning of each year. All executory costs are paid by Disney directly to third parties. THe fair value of the equipment at the inception of the lease $150,000. The equipment has a useful life of 6 years with no salvage value. The lease has an implicit interest rate of 9%, no bargain purchase option, and no transfer of title. Collectibility is reasonably assured with no additional cost to be incurred by IBM.
A. Prepare IBM (Lessor) January 1, 2018, journal entries at the inception of the lease.
B. Prepare IBM's December 31, 2018, entry to record interest.
Find a recent story primary offering in the Wall Street Journal. Based on that information in the story, indicate the characteristics of the security sold and the major underwriters. How much new capital did the firm derive from the offering.
The company could issue $2,500,000 of long-term bonds, due in 5 years with a stated rate of interest, paid semi annually, of 4%. The market rate for similar debt is 6%. What is the annual cash required and the cash received
The IRR is the discount rate that produces a zero NPV or the specific discount rate at which the present value of the cost equals ________.
Antonio's is analyzing a project with an initial cost of $41,000 and cash inflows of $26,000 a year for 2 years. This project is an extension of the firm's current operations and thus is equally as risky as the current firm. What is the projected net..
An equipment acquisition proposal was being considered by a large health care organization. The array machine will enable the hospital to perform autoimmunity tests (for immunoglobulin’s G, M, and A and complements C3 and C4) in-house rather than sen..
In commercial leases, rents do not necessarily have to be kept constant over the life of the lease term. One option is for there to be pre-specified increases in the contract rental rate over time, sometimes referred to as “step-ups” or “escalations...
A series of quarterly cash flows began with the first cash flow on April 1,1990 and ends with the last cash flow on January 1,2000. The first quarterly cash flow is equal to $24,000. Each successive cash flow increases $850. Determine the amount of e..
The Seattle Corporation has been presented with an investment opportunity which will yield cash flows of $30,000 per year in Years 1 through 4, $35,000 per year in Years 5 through 9, and $40,000 in Year 10. What is the discounted payback period for t..
Compute the expected return given these three economic states, their likelihoods, and the potential returns: (2 points) Economic State Probability Return
What is a catch-up contribution? How can someone with a 403B plan utilize catch-up contributions? How can someone with a 457 plan utilize catch-up contributions? Give examples of both 403B catch up and 457 catch up.
Use Excel formulas to do all the calculations, that is, do not calculate anything on a calculator and just input the answer in your file. Develop a spreadsheet model, and use it to find the project’s NPV, IRR, and payback. Conduct a sensitivity analy..
The current price of a stock is $20 and last year’s price was $18.87. The latest dividend is $2. Assume a constant growth rate in dividends and stock price. What is the stocks return for the coming year?
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