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Marrrta
2 months ago
10

Slush Corporation has two bonds outstanding, each with a face value of $2 million. Bond A is secured on the company’s head offic

e building; bond B is unsecured. Slush has suffered a severe downturn in demand. Its head office building is worth $1 million, but its remaining assets are now worth only $2 million. If the company defaults, what payoff can the holders of bond B expect?
Business
1 answer:
stepan [3.5K]2 months ago
6 0

Answer:

$1 million

Explanation:

The anticipated payout for holders of bond B is the total recoverable amount from asset liquidation, minus the secured bond A's valuation which stands at $2 million.

The recoverable figure includes the office building valued at $1 million alongside $2 million worth of additional assets.

This is justified as bond A is secured against the office building worth $1 million, making both bonds equal in standing at $1 million each from the proceeds available afterwards.

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During the fiscal year ended December 31, 2020, the City of Johnstown issued 5% general obligation serial bonds in the amount of
stepan [3596]

Answer:

C) As an alternative financing source in the debt service fund and as an alternative financing use in the capital projects fund.

Explanation:

The content lacks the options:

  • A) As revenue in the debt service fund and as expenditure in the capital projects fund.
  • B) As an alternative financing source in the capital projects fund and as an alternative financing use in the debt service fund.
  • C) As an alternative financing source in the debt service fund and as an alternative financing use in the capital projects fund.
  • D) As a special item recorded in both the debt service and capital project funds.

Accounts for other financing sources are utilized by governments to register revenues and expenses not tied to operational activities. The debt service fund consists of the funds that the government has allocated to cover its outstanding obligations. The capital projects fund is where the government tracks expenditures relating to designated projects.

4 0
1 month ago
A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows:Year C
marusya05 [3725]

Answer:

IRR = 14.96%

The project should be rejected, because the calculated internal rate of return falls short of the required return (14.96% < 16%).

Explanation:

The internal rate of return (IRR) is an essential calculation in capital budgeting for assessing potential investment profitability. The IRR rule guides whether to pursue a project or investment, stipulating that if the IRR exceeds the minimum required return, the project should be accepted. Conversely, if it’s lower than the cost of capital or the requisite return, the project should be turned down.

The formula used is as follows:

$0 = (initial investment x -1) + CF1 / (1 + IRR) ^ 1 + CF2 / (1 + IRR) ^ 2 +... + CFX / (1 + IRR) ^ X

Initial Investment = Total initial investment costs year x-1

CFx = Cash Flow during period X

IRR = Internal rate of return

Due to the nature of the IRR formula, it cannot be computed analytically; it must be derived through trial and error or via specialized software for IRR calculation.

In this instance:

IRR = -27200 + 11200 / (1 + IRR) ^ 1 + 14200 / (1 + IRR) ^ 2 + 10200 / (1 + IRR) ^ 3

IRR = 14.96%

The company should not proceed with the investment, as the calculated IRR is less than what is required (14.96% < 16%).

5 0
2 months ago
When joan got transferred to a new city, she went there ahead of the rest of her family and independently shopped for and purcha
Mariulka [3825]
Joan's choice can be characterized as a "heuristic decision."
8 0
2 months ago
Briana Foods Inc., a manufacturer and distributor of grocery products, uses online recruiting for sales personnel.On its Website
Free_Kalibri [3773]
C) Giving a truthful evaluation of the position. In this scenario, the online recruitment procedure begins with a thorough job description for the sales representative role. This description outlines the job's requirements and highlights key objectives necessary for success. Briana indicates that a sales representative is responsible for distributing, selling, and promoting Briana products. This individual must be the main point of contact for retail customers and consumers, implement company promotions, address inventory requirements, and keep an eye on regional competition. A representative generally spends most of their time communicating with clients to foster mutually beneficial outcomes. This information offers potential applicants a genuine understanding of the job, so they will have realistic expectations if chosen.
7 0
1 month ago
Assume an economy where the consumption function is defined as C = CC + cY, and the investment function is defined as I = mr, wh
Nady [3600]

Answer:

c and m

Explanation:

Considering the provided information,

Consumption function: C = CC + cY

Investment function: I = mr

where,

Y indicates total income

r represents the interest rate

The equation describing the IS curve can be stated as:

Y = C + I

Y = CC + cY + mr

Y - cY = CC + mr

(1 - c)Y = CC + mr

(1 - c)Y - CC = mr

\frac{(1 - c)Y - CC}{m}=r

\frac{(1-c)Y}{m} -\frac{CC}{m}=r

The slope of the IS curve is determined by differentiating 'r' with respect to 'Y',

\frac{dr}{dY}=\frac{(1-c)}{m}

Thus, the slope is contingent upon the variables c and m.

6 0
1 month ago
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