Reference no: EM131142151
Write 5-6 Page Paper by analyzing the given Case and Answer the following Question:
The given Case Study is: Lyons Document Storage Corporation: Bond Accounting
1. Lyons Document Storage's controller, Eric Petro, told Rene that the bonds were issued in 1999 at a discount and that only approximately $9.1 million was received in cash. Explain what is meant by the terms "premium" or "discount" as they relate to bonds. Compute exactly how much the company received from its 8% bonds if the rate prevailing at the time of the original issue was 9% as indicated in Exhibit 2. Also, re-compute the amounts shown in the balance sheet at December 31, 2006, and December 31, 2007, for Long-Term Debt. What is the current market value of the bonds outstanding at the current effective interest rate of 6%?
2. If you were Rene Cook, would you recommend issuing $10 million, 6% bonds on January 2, 2009 and using the proceeds and other cash to refund the existing $10 million, 8% bonds? Will it cost more, in terms of principal and interest payments, to keep the existing bonds or to issue new ones at a lower rate? Be prepared to discuss the impact of a bond refunding on the following areas:
? cash flows
? current year's earnings
? future years' earnings
Note: For purposes of your computations, assume that refunding, if selected, occurs effective January 2, 2009, at a price of $1,154.15 per bond. Ignore the effects of income taxes. How many new $1,000 bonds will Lyons have to issue to refund the old 9% bonds?
3. Assume 6% bonds could be issued and the proceeds used to refund the existing bonds. Compare the effects of these transactions with those calculated in Question 2. If you were Rene Cook, what amount of new bonds would you recommend and why?
Attachment:- Lyons-Case-Study.rar
|
Calculate the average rate of return for each stock
: Assume you held a portfolio of 70% Stock A and 30% Stock B during the period. Calculate the assumed rate of return each year for your portfolio. Then calculate the average rate of return for the entire period for your portfolio. Calculate the standar..
|
|
Describe the nine different research methodologies
: Create a presentation describing 9 different research methodologies and designs that you find interesting. Also, include information describing the IRB and its purpose.
|
|
How would you calculate an urban cpi or a rural cpi
: Think about how different groups will purchase items such as housing, travel, or education in the CPI basket, and explain why they will be affected differently by increases in components of the CPI. How would you calculate an "urban CPI" or a "rur..
|
|
Determine the source current
: Determine the source current - If the load neutrals are connected to the source neutral by a zero-ohm neutral wire through an ammeter,
|
|
Write paper by analyzing the given case
: Write 5-6 Page Paper by analyzing the given Case and Answer the following Question: - What is the current market value of the bonds outstanding at the current effective interest rate of 6%?
|
|
Which of these decades saw the lowest average inflation rate
: Which decade, the 1970s, 1980s, or 1990s, saw the highest average rate of inflation in the United States? Which of these decades saw the lowest average inflation rate?
|
|
Analysis of specific area of organizational behavior
: In the second chapter, you will undertake an analysis of one of the specific areas in the field of organizational behavior such as change management, mergers and acquisitions, cultural change, team formation, goal setting, coaching, mentoring, aff..
|
|
How much is the unemployment rate likely to rise
: Suppose the Farsighted Forecasting Group, an organization of private economists, predicts that the output gap will fall by 4 percent over the next year. According to Okun's Law, by how much is the unemployment rate likely to rise?
|
|
Calculate the following for follies bookstore
: Follies Bookstore, the only bookstore close to campus, had net income in 2005 of $90,000.Here are some of the financial ratios from the annual report. Using these ratios, calculate the following for Follies Bookstore.
|