Company has outstanding bonds originally issued at a premium. During 2015, the unamortized bond premium decreased from $12,978 to $10,935. Annual interest (coupon) paid was $10,800. The market rate of interest was 12% when the bond was issued.

Required:

Calculate:

1. Interest expense for 2015 (4 marks)

2. The face value of the bond, to the nearest thousand (4.5 marks)

3. The coupon rate of the bond (3.5 marks)

2.

10 marks

Megan Inc. has had the following stock splits since its inception.

Effective Date	Split amount
June 9, 2016	5 for 1
March 20, 2009	2 for 1

On August 23, 2019, Megans stock traded for about $240. All things equal, if Megan had never had a stock split, what would a share of Megan have traded for that same day?

3.

8 marks

In 2018, the current ratio (CR) of a company was 0.8. In early January of 2019, A/P was paid. Explain the effect the payment had on the current ratio. That is, explain whether the transaction increased, decreased, or had no effect on CR. Construct a numerical example to support your argument