Assignment - Assignment Question No.1 The market interest...

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Assignment Question No.1 The market interest rate is likely to go up in the next 4 years as under from the current rate of 6% pa in 2011. Year 2011 2012 2013 2014 2015 Market interest rate (%) pa 6.0 6.5 6.8 7.0 7.5 Assess the likely 5-year bond coupon rate pa issued in the beginning of 2011. Question No. 2 5-year bonds $800 000 were issued by a company with coupon rate 8% Market interest rate happens to be 10% at the time of issue of the bonds. Following GAAP, what is the interest expense to be charged to accounts in the 1st and 2nd year after the bonds have been issued. Question No. 3 Lucas, Inc. enters into a lease agreement as lessor on January 1, 2011, to lease an airplane to National Airlines. The term of the noncancelable lease is eight years and payments are required at the end of each year. The following information relates to this agreement: 1. National Airlines has the option to purchase the airplane for $9,000,000 when the lease expires at which time the fair value is expected to be $15,000,000. 2. The airplane has a cost of $38,000,000 to Lucas, an estimated useful life of
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This note was uploaded on 07/05/2011 for the course ACCT 301 taught by Professor Dr.jami during the Spring '11 term at Mohave Community College.

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Assignment - Assignment Question No.1 The market interest...

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