ipl-logo

Susan's Tire Tower Case Study

891 Words4 Pages

Susan’s Tire Tower wants to switch to effective interest amortization method from straight-line method. Therefore, Susan has asked me to write this memo to you to clarify the different between these two methods of amortization. How to determine the selling price of the bond? The selling price of the discounted bond is the sum of the present value of cash interest (face value X stated rate) and present value of the bond’s face value. In Susan’s Tire Tower’s case, the bond is expected to be a 4-year, $1,000,000 face value, 4% bond with an effective annual yield of 6%. This bond is selling as discounted bond because the stated rate (4%) is less than the market rate (6%). Interest will be payable semiannually, so the stated rate and market rate …show more content…

Therefore, we need to eliminate that remaining premium or discount before redeeming the bond. To know if redeeming bond before maturity is good or bad for a company, we need to consider two values, the cash that the company spend to early redeem the bond and the carrying value of a bond at the point of redeeming. If the cash paid is greater than the carrying value, the company records a gain in retirement of bonds. If cash paid is lesser than the carrying value, the company records a loss in retirement of bonds. Is redeeming bond before maturity good for Susan’s Tire Tower? In Susan’s Tire Tower case, the company would like the bonds to be callable at 101 at any time on or after March 1, 2021. If the company would like to early redeem the bond anytime after March 1, 2021 and before the maturity date March 1, 2023, the cash paid to early redeem the bond (101% x 1,000,000 = $1,010,000) is greater than the carrying value of the bond at the time of redemption (carrying value falls between $962,828 and $1,000,000). Therefore, Susan’s Tire Tower is going to record a loss if the company would like the bonds to be callable at 101 at any time on or after March 1,

Show More
Related

Xacc/280 Week 4 Mini Case

513 Words | 3 Pages

1) a. current liability: Money that a business owner must pay to a creditor within 12 months of the balance sheet date is a current liability. Ideally, short-term assets, such as cash and accounts receivable, should more than offset short-term liabilities, such as accounts payable, notes payable and payroll. If they do, the company 's short-term liquidity position is positive, which suggests the company will likely meet its cash-flow needs and remain a going concern. It is wise for a business owner to remain alert to his company 's current liabilities and the cash and assets that will be turned to cash within one year to meet these obligations. 1) b. Long-term liabilities are due more than a year after the balance sheet date.

Read More

Xacc 280 Week 1 Mini Case

247 Words | 1 Pages

In this case I will be investing $100 and the assumption is that it will be compounded monthly. Investing that for 5 years earning 5% p.a interest. My interest percent monthly will be 0.05/12, and I would get .0042%. Number of payments that is 12 months times 5 years for the first scenario to get 60 total payments. My payment is as discussed earlier of $100.00 a month.

Read More

106 Wildridge Road Case Study

158 Words | 1 Pages

I responded to 106 Wildridge Road in reference to a civil complaint. Upon arrival, I spoke with Mark and Anna Sanders. Both subjects advised that they paid David Sasser $350.00 dollars to build their son a bunk bed. They advised that Sasser told them that he spent all the money and didn’t buy any supplies. Mark then agreed that he would take Sasser to get the wood that he need, and pay for it.

Read More

Mont Park Case Study

359 Words | 2 Pages

Suzanne was an unmarried, domestic servant when committed to Royal Park Receiving House, Melbourne, in 1929, following the birth of her illegitimate baby six weeks before. Her doctor described Suzanne’s symptoms as: ‘delusional– receiving messages from spirits – and thought people are going to cut her up.’ ‘She has a depressed affect, is mildly resistive, speaks with apparent reluctance and in low tone.’ Following her transfer to Mont Park, the medical officer Dr John Catarinich noted that Suzanne suffered from puerperal insanity, syphilis and pyelitis an inflammation of the bladder. He prescribed mercury as well as ultraviolet ray treatment, known as the ‘rays’, at Mont Park.

Read More

Little Rock Nine Case Study

705 Words | 3 Pages

The Constitution limits power on Government through Checks and Balances. In a 1944 case between Korematsu and the United States during World War II, a presidential executive order gave the military authority to exclude citizens of Japanese descent from areas deemed critical to national defense and potentially vulnerable to espionage. Along with this they also arrested Japanese Americans and forced them into internment camps. Korematsu however, a US citizen from ancestry descent, refused to leave his home in San Leandro, California. Korematsu appealed, and in 1944 the case reached the Supreme Court.

Read More

Hrm/531 Week 4

936 Words | 4 Pages

One firm we are familiar with had gross sales in 1979 of ninety-six million dollars and proceeded to develop a worst case scenario in 1982-3 at a gross sales level of thirty-six million dollars. Once this key level is established, then all the other parameters must be brought in line with this sales figure, in an attempt to preserve some portion of the bottom line

Read More

5th Wheel Hitch Research Paper

361 Words | 2 Pages

You use your truck for other things besides towing your fifth wheel recreational trailer off on a mini vacation. You need the back of your truck for hauling, so you do not want a hitch that takes up a lot of space. A B&W Companion 5th Wheel Hitch is the perfect solution for your towing needs. All you have to do is remove it and convert your truck back into a level bed vehicle. Additionally, this hitch addresses the problem of sloppy hitches by offering a jerk-free ride because it is cushioned and quiet.

Read More

Fifth Wheel Hitch Research Paper

365 Words | 2 Pages

Taking your fifth wheel on a camping trip around the country is a great way to explore parks, cultures and amazing wildlife. It should be easy to head out with your trailer in tow, and a B&W Patriot 18K 5th Wheel Hitch makes it very easy to do. This fifth wheel hitch is designed as one-piece, which gives you a higher towing rating and is easy to install. The hitch fits on all Standard Mounting Rails and is 31.5-inches wide and 24-inches deep. In order to make parking your trailer easy, the head fully articulates in order to give you a side-to-side and front to back pivot.

Read More

Calaveras Vineyard Case Study Solution

1061 Words | 5 Pages

This was done with the help of a weighted average unlevered beta, the market risk premium and the risk free rate. The risk free rate of 5.85 % has been acquired from the 30 year T bond rates. The beta was found out using the three other comparable companies and their unleveraged betas. With help of all these values the discount rate of 10.847% was calculated which contributed in discounting the cash flows and obtaining the present value of cash flows. The continuing value for Calaveras has been estimated using the key value driver formula which was found out to be $ 7019.715.

Read More

Court Case Against Bail

525 Words | 3 Pages

Usually, bondsmen require 10% nonrefundable price for posting a bond for the

Read More

Sunflower Nutraceuticals Summary

1939 Words | 8 Pages

When analyzing the high risk customer, a base case with the standard WACC of 12% and a worse case with a WACC of 14% were utilized. Although the NPV of the best case was $260,000, the NPV of the worst case was negative $9,000. Due to SNC’s goals of continued growth and efficient utilization of funds, the worst case was used to make the final decision because of the uncertainty regarding this project. The prior two phases had shown a steady increase in ROE and ROA, so SNC’s executives chose to accept all projects that were certain to produce a positive NPV without overdrawing their line of credit. By adopting a global expansion strategy, SNC was able continue to grow its revenues without tying too much cash up in inventory.

Read More

Central Park Five Case Study

1142 Words | 5 Pages

Central Park spreads across 843 acres in the heart of New York. It is a calming place where people take their families for a relaxing day, walk their dogs, and exercise by running or walking through. This is a place known for its relaxing views and a place where you would believe a lack of violence to be. This all changed with the Central Park Five case. The Central Park Five case took place in 1989, this case was when five teenage males, Antron McCray, Kevin Richardson, Raymond Santana, Yusef Salaam, and Korey Wise, were charged with the rape and assault of Trisha Meili.

Read More

Capital Finance Case Study: Bankruptcy

1309 Words | 6 Pages

For the purposes of this consideration an enterprise value of $2 billion will be used to correct for a possible overestimation of Six Flags enterprise value. When a company is going to losing value, as Six Flags is, investors will want to hold the safest securities they can to avoid all their value being eroded. In this case, neither common nor preferred stocks are going to receive any recovery. This is intuitive as creditors will not approve a reorganization that gives money to equity holders, as they want that cash to recover more of their losses. Ideally, H Partners would hold the most senior, unsecured debt that is available, in this case SFO bonds.

Read More

The Pros And Cons Of The Nutritional Therapist Mary O Leary

237 Words | 1 Pages

The nutrition elective took place over the spring term, lead be Osteopath and Nutritional Therapist Mary O’Leary, she was very interested in looking at how nutrition influences recovery from injury and pain and how important it is to general well being. There were various topics covered during the sessions ranging from vitamins and minerals and how they work and what are the best food sources, to talking about certain conditions and how nutrition can play a big part in managing them and also talking about different types of diets and the pros and cons of them. The quality of the notes and lectures provided were to a high standard and were easy to follow and revise from. Mary was also particularly good at always linking the nutrition back to

Read More

Financial Case Review: The AIG Scandal 2005

703 Words | 3 Pages

Therefore, there were a few steps taken by Greenberg and Ferguson to make CRD paid $10 million without really paying. Firstly, General RE paid only $7.5 million to commute the existing contract with HSB. Secondly, General RE paid a premium of $9.1 million to NUFIC to reinsure the HSB losses which were just commuted. Thirdly, CRD paid its parent company, General RE a premium of $0.4 million for a fake reinsurance contract. Fourthly, GRD received a loss payment of $13 million from General RE.

Read More

More about Susan's Tire Tower Case Study

Related Topics

Open Document