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Question
Match each of the following terms with the appropriate definitions 1 through 10.
| 1 The contract between the bond issuer and the bondholder(s); it identifies the rights and obligations of the parties. | Secured bonds | |
| 2. A series of equal payments at equal intervals. | Annuity | |
| 3. Bonds that give the issuer an option of retiring them at a stated amount before the date of maturity. | Premium on bonds | |
| 4. Bonds that require the issuer to create a fund of assets at specified amounts and dates to repay the bonds at maturity. | Callable bonds | |
| 5. Bonds that have specific assets of the issuer pledged as collateral. | Contract rate | |
| 6. The ratio of total liabilities to total equity. | Bond indenture | |
| 7. The difference between the par value of a bond and its higher issue price or carrying value. | Sinking fund bonds | |
| 8. The interest rate specified in the bond indenture. | Carrying value | |
| 9. A written promise to pay an amount identified as the par value along with interest at a stated rate. | Debt to equity ratio | |
| 10. The net amount at which bonds are reported on the balance sheet. | Bond |
Answer
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Related questions
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A. Sell the units as scrap.
B. Rebuild the units.
C. It does not matter because both alternatives have the same result.
D. Neither sell nor rebuild because both alternatives produce a loss. Instead, the company should store the units permanently.
E. Throw the units away.
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Q:
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Q:
Periods
12 Percent 1
8929 2
1.6901 3
2.4018 4
3.0373 Assuming all revenue is to be received at the end of each year, what are the net cash flows for this investment if net present value equals ($11,790)?
A. $78,210
B. $10,920
C. $25,750
D. $237,547
E. $33,513
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B. $(251.52) and Scott would be willing to pay $29,748.48 for the machine.
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Q:
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B. It includes the time value of money.
C. It cannot be used when cash flows are not uniform.
D. It cannot be used if a company records depreciation.
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Q:
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Year 2
Year 3
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$15,000
$6,000
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i = 10% n = 2
i = 10% n = 3 .9091
.8264
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B. ($4,459.80)
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D. $8,275.00
E. $0.00
Q:
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A. Net present value, accounting rate of return, and internal rate of return.
B. Internal rate of return, payback period, and accounting rate of return.
C. Accounting rate of return, net present value, and payback period.
D. Payback period, internal rate of return, and net present value.
E. Net present value, payback period, accounting rate of return, and internal rate of return.
Q:
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A. To eliminate all risk.
B. To discount all future and past cash flows.
C. To earn a satisfactory return on investment.
D. To reverse past decisions.
E. To reduce the number of investment activities.
Q:
Are relevant costs useful to management in determining long-run pricing decisions?
Q:
What is the difference between an opportunity cost and a sunk cost?
Q:
Rocko Inc. has a machine with a book value of $50,000 and a five-year remaining life. A new machine is available at a cost of $85,000 and Rocko can also receive $38,000 for trading in the old machine. The new machine will reduce variable manufacturing costs by $14,000 per year over its five-year life. Should the machine be replaced?
A. Yes, because income will increase by $14,000 per year.
B. Yes, because income will increase by $23,000 in total.
C. No, because the company will be $23,000 worse off in total.
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Q:
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Dept. R
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$7,000
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2,000
3,000
4,000 Unavoidable
1,500
2,500
4,500 Total expenses
3,500
5,500
8,500 Net income (loss)
$2,500
$1,500
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A. $500 increase
B. $500 decrease
C. $4,000 increase
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E. $3,500 decrease
Q:
Bandy Corporation owns a machine that manufactures lawn games. Production time for the croquet set is 10 units per hour and for the volley ball game is 8 units per hour. The machines capacity is 1,500 hours per year. Both products are sold to a single customer who has agreed to buy all of the companys output up to a maximum of 4,000 croquet sets and 10,000 volleyball games. Selling prices and variable costs per unit are shown below. Based on this information, what is Bandy Corporations most profitable sales mix? Croquet Set
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$75
$62 Variable costs per unit
42
25 A. 15,000 croquet sets.
B. 12,000 volleyball games.
C. 4,000 croquet sets and 10,000 volleyball games.
D. 4,000 croquet sets and 8,800 volleyball games.
E. 2,500 croquet sets and 10,000 volleyball games.
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A company has already incurred a $24,000 cost in partially producing its two products. Their selling prices when partially and fully processed are shown in the following table with the additional costs necessary to finish their processing. Based on this information, should any products be processed further? Product
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$900
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600
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76 A. Both product A and product B should be processed further.
B. Neither product A nor product B should be processed further.
C. Only product B should be processed further.
D. Only product A should be processed further.
E. A processing further decision cannot be made from the available data.
Q:
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20 Overhead (fixed and variable)
22 Total
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A. Income will decrease by $7 per unit.
B. Income will increase by $7 per unit.
C. Income will increase by $12 per unit.
D. Income will decrease by $12 per unit.
E. Income will increase by $10 per unit.
Q:
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$20 Nonproduction costs
$3 Fixed costs (in total) Overhead
$175,000 Nonproduction
$14,000 Compute this companys total cost per unit.
A. $23
B. $45
C. $27
D. $50
E. $5
Q:
Assume markup percentage equals desired profit divided by total costs. What is the correct calculation to determine the dollar amount of the markup per unit?
A. Total cost times markup percentage.
B. Total cost per unit times markup percentage per unit.
C. Total cost per unit divided by markup percentage per unit.
D. Markup percentage per unit divided by total cost per unit.
E. Markup percentage divided by total cost.
Q:
Capital budgeting decisions are generally based on:
A. Tentative predictions of future outcomes.
B. Perfect predictions of future outcomes.
C. Results from past outcomes only.
D. Results from current outcomes only.
E. Speculation of interest rates and economic performance only.
Q:
If net present values are used to evaluate two investments that have equal costs and equal total cash flows, the one with more cash flows in the early years has the higher net present value.