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Problem - Venezeula Co. is building a new hockey arena at a cost of 2,500,000. It recieved a downpayment of 500,000 from local businesses to support the project and needs to borrow 2,000 to complete the project. It therefore decides to issue 2,000,000 of 10.5% 10 year bonds. These bonds were issued on January 1, 2009 and pay interest annually on each January 1. The bonds yield 10%. Venezuela paid 50,000 in bond issue costs related to the bond sales.
a) Prepare the journal entry to record the issuance of the bonds and the related bond issue costs incurred on January 1, 2009.
b) Prepare a bond amortization schedule up to and including January 1, 2013 using the effective interest method.
c) Assume that on July 1, 2012 Venezuela co. retires half of the bonds at a cost of $1,065,000 plus accrued interest. Prepare journal entry to record this retirement.
Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest. How much control does the Fed have over this longer real rate?
Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.
Accounting problems, Draw a detailed timeline incorporating the dividends, calculate the exact Payback Period b) the discounted Payback Period. the IRR, the NPV, the Profitability Index.
Term Structure of Interest Rates
Write a report on Internal Controls
Prepare the bank reconciliation for company.
Create a cost-benefit analysis to evaluate the project
Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR
Distinguish between liquidity and profitability.
Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.
Simple Interest, Compound interest, discount rate, force of interest, AV, PV
CAPM and Venture Capital
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