Exam 14: Planning Debt Financing

Boweil Industries is purchasing a new piece of equipment for its manufacturing facilities.The list price of the equipment is $75,000,but the dealer is willing to finance the equipment at 0% interest for 30 months.The financing agreement calls for 30 monthly installment payments of $2,500 each.Boweil's normal cost of borrowing for this type of financing arrangement is 12% annually.What value should Boweil assign to the equipment and the note if the deal is accepted?

When the cash proceeds of a note is less than the face value of a note the difference is called the:

A $1,000 bond with a quoted price of 103 3/4 is selling for:

If a firm's bonds payable are issued at a discount,it is apparent that

The interest expense on a note during a period is equal to the

On April 1,2010 Boston Corporation issued a $2,000,000 note.The note will have a ten-year life and a 6% face rate of interest that is paid annually. If the market rate of interest for the note is 8% what will be the proceeds of the note (how much cash will be the maker of the note will receive)? Set up an amortization table for the note for the two years of the note's life.How much cash interest will Boston pay during the first year of the note's life? How much interest expense will the note incur during the second year of the note's life?

If a company wants to raise $40,000 using a 5 year noninterest bearing note,what would be the face value of the note if the market rate is 10% compounded annually? What is the interest incurred on the note in the first year of its life?

A noninterest-bearing note is always issued

All things being equal,a convertible bond will have

When leased property is recognized as an asset and a related liability is recorded,the lease is a(n):

Convertible bonds may dilute existing stockholders' interest in the corporation.This means

The cash interest paid on a note during a period is equal to the

A long-term debt instrument issued by a corporation to raise money from the public is called:

Ellis Corporation wants to raise $500,000 by issuing a five year,noninterest-bearing note when the market rate is 8 percent compounded quarterly.What will the face value of the note be?

On January 1,2010,Complot Corporation issued debentures with a face interest rate of 6 percent and a market interest rate of 7 percent.How will interest expense in 2010 compare with cash interest paid and due in 2010?

Park Corporation issued a ten-year $10,000,000 bond that had an 8 percent face interest rate that is paid semi-annually when the market interest rate was 6 percent.What are the proceeds generated by this bond issue?

When convertible bonds are exchanged for common stock which of the following is not true?

When convertible bonds are exchanged for common stock which of the following is not true?

Carter & Cash has just acquired equipment by issuing a $500,000,2 year,non-interest-bearing note.The equipment was recorded on the books at $500,000.What is the result of this?

A long-term note secured by land or buildings that serve as collateral,is referred to as a: