310F-ExIIPostKey

310F-ExIIPostKey - At that time, the market rate of...

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Accounting 310F - Exam II Solutions - Summer 2010 SECTION I - MULTIPLE CHOICE (48 points - 3 points each) 1. c 6. b 11. c 16. d 2. b 7. c 12. b 3. d 8. b 13. e 4. b 9. a 14. c 5. b 10. b 15. b SECTION II - PROBLEMS (24 points) - This section of the exam consists of 2 problems. 1. Present Value (12 points) Required a. After making your 10 th payment (14 payments left), you decide you would like to pay off your loan. What is the payoff balance on your loan? Amount financed: 20,000 - 17,500 = 17,500 1 pt 17,500 = PVAF (24 per, 1%) * Payment Payment = 17,500 / 21.24339 = 823.79 3 pts PVAF (14 Per, 1%) * 823.79 = 13.00370 * 823.79 = 10,712.32 Balance with 14 payments left 4 pts b. How much interest did you pay over the life of the loan (the 10 months it was outstanding)? 8,237.90 10 payments at 823.79 10,712 .32 Payoff amount 18,950.22 Total cash paid <17,500 .00 > Amount financed 1,450 .22 Interest 4 pts

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2. Bonds (12 points) Mistletoe Corporation issued \$100,000 of 15-year, 8% bonds on January 1, 2008.
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Unformatted text preview: At that time, the market rate of interest was 7%. Work space for you to prepare an amortization table if you would like to do so . Selling Price [PVAF (15 per, 7%) * (.08 * 100,000)] + [PVF (15 per, 7%) * 100,000] = (9.10791 * 8,000) + (.36245 * 100,000) = 72,863 + 36,245 = 109,108 Premium Year Beg of Yr Int (7%) Payment Amortization End of Yr 2008 109,108 7,638 8,000 362 108,746 2009 108,746 7,612 8,000 388 108,358 2010 108,358 7,585 8,000 415 107,943 2011 107,943 7,556 8,000 444 107,499 2012 107,499 7,525 8,000 475 107,024 Required (4 pts each) a. How much interest expense should Mistletoe recognize on the bonds for the year ended December 31, 2009? \$7,612 b. What amount of net liability should Mistletoe report for the bonds on its December 31, 2010, balance sheet? \$107,943 c. How much premium (or principal) was amortized by Mistletoe during 2011? \$444...
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310F-ExIIPostKey - At that time, the market rate of...

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