Homework Answers
| a | Interest on bonds is tax deductible. | Advantage |
| b | Large payments of par value are made at maturity | Disadvantage |
| c | Bonds have no ownership controls | Advantage |
| d | An organization earns a lower return with borrowed funds than it pays interest | Disadvantage |
| e | Bonds increase return in equity if the company earns a higher return with borrowed funds than it pays in interest | Advantage |
| f | Requires payments of both periodic interest and par value at maturity | Disadvantage |
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Identify the following as either an advantage (A) or a disadvantage (D) of bond financing for...
All of the following are advantages of bond financing are true except: Provided the company with...
All of the following are advantages of bond financing are true except: Provided the company with faster capital than saving profits. Bonds can increase return on equity. Bonds do not affect ownership control of entity. Bond interest in tax deductible. Bonds requirement for use of cash does not change with the entity's cash supply.
Assignment 0 Saved Saved Help Save & Exit Which of the following is not an advantage...
Assignment 0 Saved Saved Help Save & Exit Which of the following is not an advantage of debt financing? Multiple Choice Interest is tax deductible. O The cost of borrowing may be lower than the return on equity. o The ownership interest of current stockholders is unchanged. o Debt financing often has no maturity date.
An advantage of obtaining long-term funds by issuing additional stock, instead of issuing bonds is? Multiple Choice...
An advantage of obtaining long-term funds by issuing additional stock, instead of issuing bonds is? Multiple Choice 01:22:21 - O Dividend payments can be deducted for income tax purposes Expansion is accomplished without surrendering ownership control. Interest expense is tax deductible. It lowers the chance of bankruptcy because dividends for stock are not required payments, but interest expense for bonds are required payments.
1. From the standpoint of the issuing company, a disadvantage of using bonds as a means...
1. From the standpoint of the issuing company, a disadvantage of using bonds as a means of long-term financing is that A. bond interest is deductible for tax purposes. B. interest must be paid on a periodic basis regardless of earnings. C. income to stockholders may increase as a result of trading on the equity D. the bondholders do not have voting rights. 2. Bonds that mature at a single specified future date are called A. coupon bonds. B. term...
MULTIPLE CHOICE QUESTIONS 1. The legal contract between the issuing corporation and the bondholders is called...
MULTIPLE CHOICE QUESTIONS 1. The legal contract between the issuing corporation and the bondholders is called the bond indenture A) True B) False 2.One of the similarities of bond and equity financing is that both dividends and equity distribution payments are tax deductible. C) True D) False 3. Interest on bonds is tax deductible. E) True >F) False 2. The relationship between the market rate of a bond and the rate of return on the borrowed funds affects the company's...
QS 10-4 Journalizing bond issuance LO P1 Prepare the journal entry for the issuance of these...
QS 10-4 Journalizing bond issuance LO P1 Prepare the journal entry for the issuance of these bonds. Assume the bonds are issued for cash on January 1, 2017 Garcia Company issues 11.00%, 15-year bonds with a par value of $440,000 and semiannual interest payments. On the issue date, annual market rate for these bonds is 9.00%, which implies a selling price of 114. View transaction list Journal entry worksheet Record the issue of bonds with a par value of $440,000....
I NEED HELP WITH A RESPONSE TO THE POST BELOW. How do bonds provide financing to...
I NEED HELP WITH A RESPONSE TO THE POST BELOW. How do bonds provide financing to corporations for their capital projects? Issuing bonds is the easiest most effective way to raise money to do the things needed to allow the company to grow without taking a loan from the bank with higher interest rates. A investor basically loans the company the money in exchange for interest payments. Companies are more willing to issue a bond and pay a lower interest...
1) The principal amount of a bond that is repaid at the end of the loan...
1) The principal amount of a bond that is repaid at the end of the loan term is called the bond's: A) coupon B) face value. C) maturity D) yield to maturity E) coupon rate. 2) A bond with a face value of $1,000 that sells for $1.000 in the market is called a bond A) par value B) discount C) premium D) zero coupon E) floating rate 3) A bond with a coupon rate of 6 percent that pays...
1)The principal amount of a bond that is repaid at the end of the loan term...
1)The principal amount of a bond that is repaid at the end of the loan term is called the bond's: A) coupon. B) face value. C) maturity. D) yield to maturity. E) coupon rate. 2) A bond with a face value of $1,000 that sells for $1,000 in the market is called a bond. A) par value B) discount C) premium D) zero coupon E) floating rate 3) A bond with a coupon rate of 6 percent that pays interest...
rows $500,000 to fund the project. 2. If Montclair borrows the funds, does its financing structure...
rows $500,000 to fund the project. 2. If Montclair borrows the funds, does its financing structure become more or less risky? Ex Bringham Company issues bonds with a par value of $800,000. The bonds mature in 10 years and pay 6% annual interest in semiannual payments. The annual market rate for the bonds is 8%. 1. Compute the price of the bonds as of their issue date. 2. Prepare the journal entry to record the bonds' issuance.
Assignment 0 Saved Saved Help Save & Exit Which of the following is not an advantage of debt financing? Multiple Choice Interest is tax deductible. O The cost of borrowing may be lower than the return on equity. o The ownership interest of current stockholders is unchanged. o Debt financing often has no maturity date.
An advantage of obtaining long-term funds by issuing additional stock, instead of issuing bonds is? Multiple Choice 01:22:21 - O Dividend payments can be deducted for income tax purposes Expansion is accomplished without surrendering ownership control. Interest expense is tax deductible. It lowers the chance of bankruptcy because dividends for stock are not required payments, but interest expense for bonds are required payments.
1. From the standpoint of the issuing company, a disadvantage of using bonds as a means of long-term financing is that A. bond interest is deductible for tax purposes. B. interest must be paid on a periodic basis regardless of earnings. C. income to stockholders may increase as a result of trading on the equity D. the bondholders do not have voting rights. 2. Bonds that mature at a single specified future date are called A. coupon bonds. B. term...
MULTIPLE CHOICE QUESTIONS 1. The legal contract between the issuing corporation and the bondholders is called the bond indenture A) True B) False 2.One of the similarities of bond and equity financing is that both dividends and equity distribution payments are tax deductible. C) True D) False 3. Interest on bonds is tax deductible. E) True >F) False 2. The relationship between the market rate of a bond and the rate of return on the borrowed funds affects the company's...
QS 10-4 Journalizing bond issuance LO P1 Prepare the journal entry for the issuance of these bonds. Assume the bonds are issued for cash on January 1, 2017 Garcia Company issues 11.00%, 15-year bonds with a par value of $440,000 and semiannual interest payments. On the issue date, annual market rate for these bonds is 9.00%, which implies a selling price of 114. View transaction list Journal entry worksheet Record the issue of bonds with a par value of $440,000....
1) The principal amount of a bond that is repaid at the end of the loan term is called the bond's: A) coupon B) face value. C) maturity D) yield to maturity E) coupon rate. 2) A bond with a face value of $1,000 that sells for $1.000 in the market is called a bond A) par value B) discount C) premium D) zero coupon E) floating rate 3) A bond with a coupon rate of 6 percent that pays...
1)The principal amount of a bond that is repaid at the end of the loan term is called the bond's: A) coupon. B) face value. C) maturity. D) yield to maturity. E) coupon rate. 2) A bond with a face value of $1,000 that sells for $1,000 in the market is called a bond. A) par value B) discount C) premium D) zero coupon E) floating rate 3) A bond with a coupon rate of 6 percent that pays interest...
rows $500,000 to fund the project. 2. If Montclair borrows the funds, does its financing structure become more or less risky? Ex Bringham Company issues bonds with a par value of $800,000. The bonds mature in 10 years and pay 6% annual interest in semiannual payments. The annual market rate for the bonds is 8%. 1. Compute the price of the bonds as of their issue date. 2. Prepare the journal entry to record the bonds' issuance.
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