96. White & Decker Corporation's 2013 financial statements included the following information in the
long-term debt disclosure note:
The disclosure note stated the debenture bonds were issued late in 2008 and have a maturity
value of $500 million. The mat
95. On the last day of its fiscal year ending December 31, 2013, the Boatright Ship Builders completed
two financing arrangements. The funds provided by these initiatives will allow the company to
expand its operations.
1. Boatright issued 6% stated rate
92. Bison Mfg. is considering two options for purchasing comparable machinery. Machine 1 will cost
$27,500 plus an annual maintenance fee of $1,500 per year for four years. Machine 2 will cost
$25,000 with maintenance being an add-on charge. The estimated
93. On May 1, 2013, Bo Smith, proud father of newborn son Bobo, purchased $200,000 in zerocoupon bonds that mature on May 1, 2031. The bonds pay no interest during the period of time
they are outstanding. The interest rate for such borrowings is at 9%. In
91. Hillsdale is considering two options for comparable computer software. Option A will cost $25,000
plus annual license renewals of $1,000 for three years, which includes technical support. Option B
will cost $20,000 with technical support being an add-
90. Dobson Contractors is considering buying equipment at a cost of $75,000. The equipment is
expected to generate cash flows of $15,000 per year for eight years and can be sold at the end of
eight years for $5,000. Interest is at 12%. Assume the equipmen
89. Baird Bros. Construction is considering the purchase of a machine at a cost of $125,000. The
machine is expected to generate cash flows of $20,000 per year for 10 years and can be sold at
the end of 10 years for $10,000. Interest is at 10%. Assume the
87. Touche Manufacturing is considering a rearrangement of its manufacturing operations. A
consultant estimates that the rearrangement should result in after-tax cash savings of $6,000 the
first year, $10,000 for the next two years, and $12,000 for the ne
85. Compute the present value of the following single amounts to be received at the end of the
specified period at the given interest rate.
86. DON Corp. is contemplating the purchase of a machine that will produce net after-tax cash
savings of $20,000 pe
83. Suppose that Healdsburg enters into a sales contract with an auto manufacturer on January 1,
2013, to provide tires that cost Healdsburg $18 million to produce. The buyer offers Healdsburg $6
million in cash and agrees to take over the principal payme
81. Suppose that Healdsburg wants to buy back the 7.75% notes on December 31, 2013, (i.e., five
years early) when the going interest rate is 6%, thereby retiring the $345,154,000 in debt. How
much would Healdsburg have to pay for the notes (principal only
The following information was disclosed in the Debt footnote to the financial statements of
Healdsburg Company for the year ended December 31, 2012:
Debt. The following table summarizes the long-term debt of the Company at December 31, 2012.
All of the n
79. Listed below are 10 terms followed by a list of phrases that describe or characterize the terms.
Match each phrase with the correct term.
The first cash flow occurs more than
1. Future value of an
one period after the date of the
78. Listed below are 5 terms followed by a list of phrases that describe or characterize each of the
terms. Match each phrase with the correct term.
The money to which an amount invested
2. Future value of a
3. Ordinary annuity
76. Listed below are 5 terms followed by a list of phrases that describe or characterize each of the
terms. Match each phrase with the correct term.
1. Monetary asset
Claim to a fixed amount of cash. _
Current worth of a series of equal
74. Fenland Co. plans to retire $100 million in bonds in five years, so it wishes to create a fund by
making equal investments at the beginning of each year during that period in an account it expects
to earn 8% annually. What amount does Fenland need to
71. Kunkle Company wishes to earn 20% annually on its investments. If it makes an investment that
equals or exceeds that rate, it considers it a success. Assume that it invests $2 million and gets
$500,000 in return at the end of each year for X years. Wh
68. Sandra won $5,000,000 in the state lottery, which she has elected to receive at the end of each
month over the next 30 years. She will receive 7% interest on unpaid amounts. To determine the
amount of her monthly check, she should use a table for the:
63. Garland Inc. offers a new employee a lump-sum signing bonus at the date of employment, June 1,
2013. Alternatively, the employee can take $39,000 at the date of employment plus $10,000 each
June 1 for five years, beginning in 2017. Assuming the employ
65. Loan C has the same principal amount, payment amount, and maturity date as Loan D. However,
Loan C is structured as an annuity due, while Loan D is structured as an ordinary annuity. Loan
C's interest rate is:
A. Higher than Loan D.
B. Less than Loan
61. Davenport Inc. offers a new employee a lump-sum signing bonus at the date of employment.
Alternatively, the employee can take $30,000 at the date of employment and another $50,000 two
years later. Assuming the employee's time value of money is 8% annu
58. Yamaha Inc. hires a new chief financial officer and promises to pay him a lump-sum bonus four
years after he joins the company. The new CFO insists that the company invest an amount of
money at the beginning of each year in a 7% fixed rate investment
53. Simpson Mining is obligated to restore leased land to its original condition after its excavation
activities are over in three years. The cash flow possibilities and probabilities for the restoration
costs in three years are as follows:
55. A series of equal periodic payments in which the first payment is made one compounding period
after the date of the contract is:
A. A deferred annuity.
B. An ordinary annuity.
C. n annuity due.
D. delayed annuity.
56. Loan A has the same original
47. Spielberg Inc. signed a $200,000 noninterest-bearing note due in five years from a production
company eager to do business. Comparable borrowings have carried an 11% interest rate. What
is the value of this debt at its inception?
50. Polo Publishers purchased a multi-color offset press with terms of $50,000 down and a
noninterest-bearing note requiring payment of $20,000 at the end of each year for five years. The
interest rate implicit in the purchase contract is 11%. Polo would
45. An investment product promises to pay $42,000 at the end of 10 years. If an investor feels this
investment should produce a rate of return of 12%, compounded annually, what's the most the
investor should be willing to pay for the investment?
Present and future value tables of 1 at 9% are presented below.
40. Ajax Company purchased a five-year certificate of deposit for its building fund in the amount of
$220,000. How much should the certificate of deposit be worth at the end of five years if
42. How much must be deposited at the beginning of each year to accumulate to $10,000 in four
years if interest is at 9%?
43. Claudine Corporation will deposit $5,000 into a money market sinking fund at the en
31. Micro Brewery borrows $300,000 to be paid off in three years. The loan payments are semiannual
with the first payment due in six months, and interest is at 6%. What is the amount of each