2. A company's convertible bonds of par value Rs. 1,00,000/- are convertible at a price of Rs. 5/- share as of 30th June 2021 into 50,000 ordinary shares. The conversion price as of of issue date of 31st March 2021 is Rs. 4/- share. The conversion value as of issue date is
Q: QUESTION 5 You are considering investing $1,000 in a complete portfolio. complete portfolio is…
A: Total investment = $1000 Investment consists of 70% risky portfolio and 30% treasury bills Risky…
Q: You want to buy a $183,000 home. You plan to pay 10% as a down payment, and take out a 30 year loan…
A: The down payment is the amount of cash paid while purchasing the home. The down payment decreases…
Q: There are only 2 assets to invest in, both being risky. AAPL has an expected return of 10% and…
A: We have to find the graph that correctly depicts the set of all feasible risky portfolio.
Q: Subsidiary Company had common stock of P350,000 and retained earnings of P490,000. Parent Inc. had…
A: Given Subsidiary Company Retained Earning = P490,000 Parent Inc. Retained Earning = P980,000 Total…
Q: What is the nominal annual rate of interest compounded monthly at which $1663.00 will accumulate to…
A: Number of monthly periods = Number of years×12 =3.25×12=39 Monthly interest rate is calculated using…
Q: Mental Health Substance Abuse Tuberculosis Control 4) You have received grant funding from the state…
A: according to bartelby guidelines , if question involves multiple sub parts , then 1st sub 3 parts…
Q: The Sisneros Company is considering building a chili processing plant in Hatch, New Mexico. The…
A: Honor code: Since you have posted a question with multiple sub-parts, we will solve the first three…
Q: You sell a 50 put for 4. Stock ends at $47. Payoff=............
A: we have; Stock end price is $47 Strike price as $50 put premium is $4 To Find: Payoff
Q: Dudley's has a preferred share issue outstanding with a current price of $26.57 per share and a par…
A: The cost of preferred shares is computed by dividing the dividend by the current price. Expected…
Q: FastTrack Bikes, Inc. is thinking of developing a new composite road bike. Development will take six…
A: NPV and IRR NPV and IRR are the capital budgeting tools that help in deciding whether the capital…
Q: Calculate the weights of capital components based on the book value balance sheet. (answer in excel…
A: Weights of capital components refer to the company’s financial assets. And the weight of all…
Q: Analog Electronic Corporation has an ROE = 9% and plowback ratio of 2/3. This year's earnings were…
A: We have; ROE is 9% The plowback ratio is 2/3 Earning per share is $3 The cost of equity is 12%
Q: You sell a 50 put for 4 and buy a 55 call for 5. Stock ends at $47. Payoff=..
A: Put strike price is $50 Call strike price is $55 Stock ends at $47 To Find: Payoff
Q: You have taken a loan of $95,000.00 for 27 years at 5.5% compounded quarterly. Fill in the table…
A: Given Loan amount is $95000 Term is 27 years Rate is 5.5%
Q: You have been asked to develop a pro forma statement of cash flow for Betts Distribution Center, an…
A: Base rent per square feet = $7 Number of square feet = 230,000 Total base rent =…
Q: 4. Interest rate parity The rise of globalization is due to the many companies that have become…
A: The annualized return is calculated by converting the return for less than a year to a return for a…
Q: City of Oliver is considering automating a process in its accounting department that has been…
A: Net present value method. It is capital budgeting technique used for making investment decisions.…
Q: If the decision is made by choosing the project with the higher IRR, how much value will be forgone?
A: Data collected from main section: IRR of project S = 17.38% IRR of project L = 14.72%
Q: How do I find u. I am having a hard time with finding it. Can you show me how to do that. I…
A: We have to explain how to find "u".
Q: Jaylynn Bennett is an Auckland based financial analyst covering Cavalier Corporation Limited.…
A: Several statements have been given explaining the reduction in inventory turnover. We have to find…
Q: marie chi inherited 425,000 from her grandmother and decided to invest the funds at 8% per year.how…
A: Investment amount (PV) = 425,000 Interest rate (r) = 8% Period (n) = 20 Years
Q: Cullumber Industries has 8 percent coupon bonds outstanding. These bonds have a market price of…
A: Different sources of capital have been provided. We have to find the WACC.
Q: What present value amounts to $11,273.57 if it is invested for 5 years at 10% compounded annual?…
A: Present value is calculated using following equation Present value = Future value1+rn Where, r is…
Q: You sell a 55 call for 4. Stock ends at $61. Profit=..........
A: The strike price of the Call is 55 Call Premium is 4 The ending price is $61 To Find: Net profit
Q: Calculate the purchase price of the $1,000 face value bond using the information given below. (Do…
A: Given Face value of bond $1000 Coupon rate is 5.40%Market rate is 7.2%
Q: This equation is used to find the monthly payment, m, given the monthly interest rate, i, the…
A: Mortgage loans make the house buying very easy and the mortgages are paid by the monthly payments…
Q: The stock trades at $50. You buy a 45 put. The intrinsic value is $................... and the put…
A: An option is a type of financial instrument that is based on the value of underlying securities,…
Q: A proposed nuclear power plant will cost $ 965 million and then produce cash inflows of $ 147…
A: Net Present Value is a technique which is used to understand how feasible a project is. It uses the…
Q: The treasurer of a major U.S. firm has $41571485 to invest for three months. The annual interest…
A: Amount available for investment = $41,571,485 Spot rate = £0.72 per dollar 3 Month forward rate =…
Q: Which of the following is defined as comparing actual performance to planned performance and…
A: Performance refers to the subjective measurement of the use of assets by the firm during its primary…
Q: Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime…
A: The current balance will be a function of opening balance, fresh borrowing, less repayment and the…
Q: The Campbell Company is considering adding a robotic paint sprayer to its production line. The…
A: This is a typical capital budgeting exercise. We have to estimate all the cash flows first and then…
Q: “Increasing financial leverage increases both the cost of debt (rdebt) and the cost of equity…
A: Given that Buggins Inc is financed equally by debt and equity (Before repurchase) Market value =…
Q: A debt of $17,500 is repaid by payments of $2850 made at the end of each year. Interest is 8%…
A: Compound Interest When the investor earns interest over the interest received from the investment,…
Q: The Christopher Co. issued 8%, semi-annuall coupon bonds with 6 years to maturity. Each bond is…
A: Cost of debt is the post tax Yield to Maturity of which is the IRR of the bond. YTM is the rate that…
Q: Ve are given a 15-year $1,000 bond with 8% annual coupons sells at par. (a) Determine the price of…
A: Duration of bond tell the sensitivity of bond's prices with change in interest rate and show how…
Q: % Return on T-Bills, Stocks and Market Index State of the economy Probability T-Bills Phillips…
A: Capital Asset pricing Model (CAPM) is used to determine the required return of the stock. It is…
Q: How do you do the math to get from A to B here? Riley will receive retirement income from their…
A: COLA refers to the cost of living adjustment. COLA is the increase in salaries and benefits to…
Q: % Return on T-Bills, Stocks and Market Index State of the economy Probability T-Bills Phillips…
A: Correlation, an analytical metric, illustrates how the movements of several asset classes are…
Q: interest costs O No answer text provided. O externalities O opportunity costs
A: In the capital budgeting there is need to calculate the incremental cash flow and based on the…
Q: To purchase a specialty guitar for his band, for the last year JJ Morrison has made payments of $98…
A: Payment per month for guitar is $98 The interest rate is 5.84% Compounded monthly The term of…
Q: You are given the following cash flow information for Project A PV Outflows TV Inflows $150,000.00…
A: MIRR is used to determine the attractiveness of a project. It considers the concept of IRR as it is…
Q: Suppose Intel stock has a beta of 0.88, whereas Boeing stock has a beta of 1.18. If the risk-free…
A: CAPM stands for capital asset pricing model. This model describes the relationship between expected…
Q: A project that provides annual cash flows of $14,000 for nine years costs $70,000 today. At what…
A: The internal rate of return (IRR) is the expected annual growth rate from an investment. IRR is…
Q: A debt of $7,000.00 is to be paid off with 10 equal semi-annual payments. If the interest rate is…
A: Given: Particulars Amount Debt (PV) $7,000 Semi annual payments(NPER) 10 Interest rate 13%
Q: For the data given below, what would the naive forecast (without a trend) be for period 5? Period…
A: In finance we often use different forecasting methods and techniques to project variables for…
Q: Sammie's Club wants to buy a 320,000-square-feet distribution facility on the northern edge of a…
A: Going-in capitalization rate/Direct Capitalization Method Projected first-year NOI divided by the…
Q: etect and Identify the behavioural biases investor exhibits in investment decision making.
A: Investment choice It refers to how a business's finances are to be invested in various assets so…
Q: Estimating Intrinsic Share Value Using Dividend Discount Model Mattel, Inc. is expected to pay a…
A: We have; Cost of equity or required rate of return as 8% Amount of dividend is $1.44 for part-3, the…
Q: The Up and Coming Corporation's common stock has a beta of 1.29. If the risk-free rate is 0.04 and…
A: To calculate the cost of equity capital we will use the below formula Cost of equity = Risk free…
2. A company's convertible bonds of par value Rs. 1,00,000/- are convertible at a price of Rs. 5/- share as of 30th June 2021 into 50,000 ordinary shares. The conversion price as of
of issue date of 31st March 2021 is Rs. 4/- share. The conversion value as of issue date is
Step by step
Solved in 2 steps
- On December 31, 2020, Tamia Company showed the following balances: Bonds payable - 6% Discount on bonds payable Share premium - issuance Share premium - conversion privilege 4,000,000 500,000 5,000,000 700,000 The interest is payable annually every December 31. The convertible bonds are not converted but fully paid on December 31, 2020. On such date, the quoted price of the convertible bonds with conversion option is 105 which is the payment to the bondholders plus interest. However, the quoted price of the bonds without the conversion privilege is 95. 1. What is the carrying amount of the bonds payable on December 31, 2020? a. 4,000,000 b. 4,500,000 c. 3,500,000 d. 4,200,000 2. What is the gain or loss from extinguishment of bonds? a. 700,000 gạin b. 700,000 loss c. 300,000 gain d. 300,000 loss 3. What is the total payment to the bondholders on December 31, 2020? a. 4,200,000 b. 4,440,000 c. 4,240,000 d. 4,040,000On December 31, 2021, PISTACHIO Company had outstanding ₱20 million face value convertible bonds maturing on December 31, 2024. Interest is payable annually on December 31. Each ₱1,000 bond is convertible into 60 shares of PISTACHIO’s ₱P10 par ordinary shares. The unamortized premium balance on December 31, 2021 is ₱350,000. The balance of Share premium arising from bond conversion privilege is ₱640,000. On this date, an individual holding 2,000 of the bonds exercised the conversion privilege when the market value of PISTACHIO’s ordinary share was ₱18. What is the amount credited to share premium upon conversion of the bonds? *Computalog Inc. showed the following on its December 31, 2023, balance sheet: Bonds payable, convertible $ 4,040,000 Less: Unamortized discount 14,544 $ 4,025,456 Required: 1. Assuming the bonds are convertible into 404,000 common shares, journalize the conversion on January 1, 2024, when the market value per common share was $10.25. 2. How will the conversion of bonds into common shares affect the elements of the balance sheet (assets, liabilities, equity)?
- On January 1, 20x1, an entity issues bonds with a face amount of P8,000,000 for P8,600,000. The bonds mature on December 31, 20x4 and pay annual interest of 11% every December 31. The entity incurs transaction costs of P81,645. The effective interest rate adjusted for transaction costs is 9%. ◦Requirements: ◦A. Compute for the initial carrying amount of the bonds. ◦B. Compute for the net discount or net premium (including the effect of the bond issue cost) from the issuance on initial recognition. ◦C. Are the periodic interest payments greater than or less than the periodic interest expenses? ◦D. Prepare all the journal entries during the term of the bonds.On December 31, 2020, Tamia Company showed the following balances: Bonds payable - 6% Discount on bonds payable Share premium - issuance Share premium - conversion privilege 4,000,000 500,000 5,000,000 700,000 The interest is payable annually every December 31, "Th. convertible bonds are not converted but fully paid on December 31, 2020. On such date, the quoted price of the convertible bonds with conversion option is 105 which is the payment to the bondholders plus interest. However, the quoted price of the bonds without the conversion privilege is 95. 1. What is the carrying amount of the bonds payable on December 31, 2020? a. 4,000,000 b. 4,500,000 c. 3,500,000 d. 4,200,000 2. What is the gain or loss from extinguishment of bonds? a. 700,000 gain b. 700,000 loss c. 300,000 gain d. 300,000 loss 3. What is the total payment to the bondholders on December 31, 2020? a. 4,200,000 b. 4,440,000 c. 4,240,000 d. 4,040,000Computalog Inc. showed the following on its December 31, 2023, balance sheet: Bonds payable, convertible $4,020,000 Less: Unamortized discount 14,472 $4, 005, 528 Required: 1. Assuming the bonds are convertible into 402,000 common shares, journalize the conversion on January 1, 2024, when the market value per common share was $10.25.
- On 1 July 2022, SFU Co issued a convertible bond at par value of $20 million and has recordedit as a non-current liability. The bond is redeemable for cash on 30 June 2024 at par. Bondholderscan however, opt for the conversion in the form of a fixed number of shares. Interest on the bondis payable at a rate of 4% a year in arrears. The interest paid in the year has been presented asfinance cost. The interest rate on similar debt without a conversion option is 10%, with a presentvalue of $17,91 million at 1 July 2022. Discuss how the convertible bonds should be accounted for during the 2023 financialperiod. Please also show the calculations for my understandingOn January 1, 2022, Cai Ltd. issued a 10% convertible bond at par, with a face value of ¥100,000, maturing on January 1, 2032 (amounts in thousands). The bond is convertible into ordinary shares of Cai at a conversion price of ¥2,500 per share. Interest is payable annually. At date of issue, Cai could have issued at par non-convertible debt with a 10-year term bearing an interest rate of 11% instruction a) Prepare the journal entry to record the issuance of the convertible debt on January 1, 2022. b) On January 1, 2025, Cai makes a tender offer to the holder of the convertible debt to repurchase the bond for ¥112,000, which the holder accepts. At the date of repurchase, Cai could have issued non-convertible debt with a 7-year term at an effective-interest rate of 8%. Prepare the journal entry to record this repurchase on January 1, 2025.On January 1, 2019, Lin plc issued a convertible bond with a par value of £50,000 inthe market for £60,000. The bonds are convertible into 6,000 ordinary shares of £1 per sharepar value. The bond has a 5-year life and has a stated interest rate of 10% payable annually.The market interest rate for a similar non-convertible bond at January 1, 2019, is 8%. Theliability component of the bond is computed to be £53,993. The following bond amortizationschedule is provided for this bond.Effective-Interest Method10% Bond Discounted at 8%Date Cash Paid InterestExpense PremiumAmortized Carrying Amountof Bonds1/1/19 £53,99312/31/19 £5,000 £4,319 £681 53,31212/31/20 5,000 4,265 735 52,57712/31/21 5,000 4,206 794 51,78312/31/22 5,000 4,143 857 50,92612/31/23 5,000 4,074 926 50,000Instructionsa. Prepare the journal entry to record the issuance of the convertible bond on January 1,2019.b. Prepare the journal entry to record the payment of interest on December 31, 2020.c. Assume that the bonds were…
- On January 1, 2019, Lin plc issued a convertible bond with a par value of £50,000 inthe market for £60,000. The bonds are convertible into 6,000 ordinary shares of £1 per sharepar value. The bond has a 5-year life and has a stated interest rate of 10% payable annually.The market interest rate for a similar non-convertible bond on January 1, 2019, is 8%. Theliability component of the bond is computed to be £53,993. The following bond amortizationschedule is provided for this bond.Effective-Interest Method10% Bond Discounted at 8%Date Cash Paid InterestExpense PremiumAmortized Carrying Amountof Bonds1/1/19 £53,99312/31/19 £5,000 £4,319 £681 53,31212/31/20 5,000 4,265 735 52,57712/31/21 5,000 4,206 794 51,78312/31/22 5,000 4,143 857 50,92612/31/23 5,000 4,074 926 50,000 Prepare the journal entry to record the conversion on December 31, 2021. Assume thatthe accrual of interest related to 2021 has been recorded.d. Assume that the convertible bonds were repurchased on December 31, 2021,…1. On January 1, 2025, Ariana Corporation issued its 8%, 5-year convertible debt instrument with a face amount of P8,000,000 for P7,700,000. Interest is payable every December 31 each year. The debt instrument is convertible into 50,000 ordinary shares with a par value of P100. When the debt instrument were issued, the bonds without the conversion option were sold for P7,393,312 yielding 10%. On December 31, 2027, P6,400,000 of the convertible debt instrument were converted. How much is the gain or loss on conversion taken to profit or loss for the year 2027? With solution po :)) Thank you, dear tutor/s!❤️7. On January 1, 2020, Shredder Company Issued its 10%, 4-year convertible debt instrument with a face amount of P3,000,000 for P3,500,000. Interest is payable every December 31 of each year. The debt instrument is convertible into 30,000 ordinary shares with a par value of P100. The debt instrument is convertible into equity from the time of issue until maturity. When debt instruments were issued, the prevailing market rate of interest for similar debt without conversion option is 8%. PV of 8% for an ordinary annuity of P1 after 4 periods 3.3121268PV of 8% after 4 interest periods .7350298 On December 31, 2022, Shredder Company converted all the debt instruments by issuing 30,000 ordinary shares. 1. What is the carrying value of the compound instruments as of December 31, 2022?2. What is the amount of interest expense should the company report in the Dec. 31, 2021 profit or loss?