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Answer 1 | |
Interest Paid (5000000*8%) | 400,000 |
Principal paid | 5,000,000 |
Year | PV factor @ 10% |
1 | 0.90909091 |
2 | 0.82644628 |
3 | 0.75131480 |
4 | 0.68301346 |
5 | 0.62092132 |
6 | 0.56447393 |
7 | 0.51315812 |
8 | 0.46650738 |
9 | 0.42409762 |
10 | 0.38554329 |
Total | 6.14456711 |
Present value of Principal payment (5000000*0.38554329) | $ 1,927,716 |
Present value of Interest payment (400000*6.14456711) | $ 2,457,827 |
Proceeds of the bond issue | $ 4,385,543 |
Correct Option is D. | $ 4,385,543 |
Answer 2 | |
Net income | 48,000 |
Less: Extraordinary Gain (net of tax) (15000-(15000*30%)) | 10500 |
Income from continuous operation | 37,500 |
Correct Option is C. | $ 37,500 |
Answer 3 | |
Tax rate not provided. | |
No answer can be determined. (because of Tax rate should not provided.) | |
Correct Option is D. | No answer can be determined |
Answer 4 | |
The entire amount of each lease payment is considered rent expense under the Operating lease. | |
The entire amount of each lease payment is considered rent expense. This statement is not true for capital lease. | |
Correct Option is A. | The entire amount of each lease payment is considered rent expense. |
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