Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please answer both questions (don't have much questions left) On April 1, 2014, Able Co borrows $200,000 for four years from the Toy Company to

please answer both questions (don't have much questions left)image text in transcribedimage text in transcribed

On April 1, 2014, Able Co borrows $200,000 for four years from the Toy Company to obtain funds to buy a plece of commercial property. As collateral, Able Co.glves Toy Company a mortgage on the manufacturing plant that it owns and that are on its books at a cost of $50,000. Interest is charged on the unpaid balance of the loan principal at an Interest rate of 4 percent per year compounded semiannually. Payments are due on April 1 and October 1 of each year. Able co agrees to make eight payments over the four years of the mortgage so that when the last payment is made on April 1, 2018, the loan and all interest will have been paid. The first seven payments are to be equal. The eighth payment is to be just large enough to discharge the balance of the loan. Able Co. closes its books annually on December 31 and uses the effective interest method. Each equal payment from October 2014 October 2018 is equal to (round to the nearest hundred): Multiple Choice O $27300 O $22,200 O $52,500 None of the other alternatives are correct / Not enough data provided to calculate it O $22,300 If the contract (stated) rate on a bod is 7% and the market rate of interest at the time of sale is 6% then the bond will: Multiple Choice Sell at par Sell at a premium Unable to determine with the data provided Sell at a discount Sell at face value

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Connect For Computer Accounting With Quickbooks 2021

Authors: Author

20th Edition

1264069200, 9781264069200

More Books

Students also viewed these Accounting questions