Match each situation with the term that best describes it. Use each term only once.

a. Personal power
b. Legitimate power
c. Reward power
d. Coercive power
e. Expert power
f. Informational power
g. Referent power
h. Persuasive power

1. One of your subordinates only seems to respond to threats of punishment. What type of power should you use to motivate him?
2. You manage a difficult subordinate who only cooperates when she feels that youhave the formal authority to ask her to do something. What type of power shouldyou use to motivate her?
3. One of your subordinates looks up to you as a role model. What type of powershould you use to motivate her?

Answers

Answer 1

Answer:

1. One of your subordinates only seems to respond to threats of punishment. What type of power should you use to motivate him?

h. Persuasive power

2. You manage a difficult subordinate who only cooperates when she feels that you have the formal authority to ask her to do something. What type of power should you use to motivate her?

b. Legitimate power

3. One of your subordinates looks up to you as a role model. What type of power should you use to motivate her?

a. Personal power

Explanation:

In any given situations there are different incidents that would require someone to apply different power in-order to manage the situation. This could be in form of motivation or deterrent method during the application of the power.

For example, in the case of the subordinate looking up to you as a role model, you should apply personal power in-order to motivate the person. the personal power will help you to build personal relationship between the subordinate and you.

Answer 2

According to the condition, the following matches are as follows:

One of your employees appears to react to threats of punishment solely. This condition is a Persuasive type of power you should use to motivate him. Thus, the correct matches are 1-h, 2-b, 3-a.

A persuasive individual may persuade others to make intelligent judgments, as well as convince others to make foolish decisions.

Thus, it is beneficial for the organization when that individual has expertise as well as the judgment to recognize when they should seek the opinion of someone else.

You manage a tough subordinate who only cooperates when she believes you have the official power to request something of her. The Legitimate type of power is used to motivate.

One of your subordinates regards you as a mentor. The Personal type of power is used here.

Therefore, the correct option is 1-h, 2-b, 3-a.

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Related Questions

Demand forecasting is the process of creating statements about ____________ of demand that are ______________.

a. future realizations, currently uncertain
b. current uncertainties, future realized
c. current realizations, future realized
d. future uncertainties, currently realized

Answers

Answer:

a. future realizations, currently uncertain

Explanation:

Demand forecasting is the process where the demand is forecasted based on the past sales so that the estimation of the customer demand could be done. It tells the value of the goods and services that the customer will buy in near future

So according to the given options, the first option is correct as it is based on the future i.e. totally uncertain

Therefore the first option is to be chosen

A ball rolls across a floor with an acceleration of 0.100 m/s2 in a direction opposite to its velocity. The ball has a velocity of 4.00 m/s after rolling a distance 6.00 m across the floor. What was the initial speed of the ball?a. 4.15 m/s.
b. 5.85 m/s.
c. 4.60 m/s.
d. 5.21 m/s.
e. 3.85 m/s.

Answers

Answer:

a. 4.15 m/s.

Explanation:

Given the following data;

Acceleration, a = -0.100 because it's in the opposite direction.

Final velocity = 4

Distance = 6

To find the initial velocity of the ball, we would use the third equation of motion;

[tex] V^{2} = U^{2} + 2aS [/tex]

Where;

V represents the final velocity measured in meter per seconds. U represents the initial velocity measured in meter per seconds. a represents acceleration measured in meters per seconds square. S represents the displacement measured in meters.

[tex] V^{2} = U^{2} + 2aS [/tex]

Making U the subject, we have;

[tex] U^{2} = V^{2} - 2aS [/tex]

Substituting into the equation, we have;

[tex] U^{2} = 4^{2} - 2*(-0.100)*(6) [/tex]

[tex] U^{2} = 16 + 1.2 [/tex]

[tex] U^{2} = 17. 2[/tex]

Taking the square root of both sides;

U = 4.147m/s ≈ 4.15m/s

Therefore, the initial speed of the ball is 4.15m/s.

You are starting your own small business in Albuquerque. You borrow $10,000 from the bank at a 9% rate for 5 years. What is the total amount you will pay on this loan.

Answers

Answer:

4,500

Explanation:

Use the I=PRT method to help

P=10,000      T=5 years     R=9%=9/100=0.09

this is going to be your equation

I=10,000 x .09 x 5

multiply you t x r

it should now look like this,

I=10,000 x .45

now the last thing to do is just multiply them both.

you should get,

I=4500

Which type of supply chain collaboration includes collaborative processes across the supply chain using a set of processes and technology models including a joint business plan, sales forecasting, order planning and forecasting, order generation, and order fulfillment?

Answers

Answer:

Collaborative Planning, Forecasting and Replenishment (CPFR)

Explanation:

Supply chain management can be defined as the effective and efficient management of the flow of goods and services as well as all of the production processes involved in the transformation of raw materials into finished products that meet the insatiable want and need of the consumers. Generally, the supply chain management involves all the activities associated with planning, execution and supply of finished goods and services to the consumers.

The fundamental principle of supply chain management is basically a collaboration between multiple firms. These multiple firms include a company that is saddled with the responsibility of manufacturing, a wholesaler, and a retailer who typically sells the products to the customers or consumers.

Basically, these three (3) firms or individuals are required to collaborate with each other so as to meet the needs of the customers in a timely manner or fashion and at a fair price too.

Collaborative Planning, Forecasting and Replenishment (CPFR) is a type of supply chain collaboration which includes collaborative processes across the supply chain using a set of processes and technology models including a joint business plan, sales forecasting, order planning and forecasting, order generation, and order fulfillment.

1. You have a portfolio that is invested 21% in Stock A, 34% in Stock B, and 45% in Stock C. The betas of the stocks are .66, 1.21, and 1.50, respectively. What is the beta of the portfolio? a. 1.17.b. 1.12.c. 1.38.d. 1.00.e. 1.23.2. The risk-free rate is 3.7% and the market expected return is 11.6%. What is the expected return of a stock that has a beta of 1.22?

Answers

Answer:

1.

Portfolio Beta = 1.225 rounded off to 1.23

Option e is the correct answer.

2.

r = 0.13338 or 13.338% rounded off to 13.34%

Explanation:

1.

The portfolio beta is a function of the weighted average of the individual stocks' betas that form up the portfolio. To calculate the beta of a portfolio, we use the following formula,

Portfolio Beta = wA * Beta of A  +  wB * Beta of B  + ... + wN * Beta of N

Where,

w is the weight of each stock

Portfolio Beta = 0.21 * 0.66  +  0.34 * 1.21  +  0.45 * 1.5

Portfolio Beta = 1.225 rounded off to 1.23

2.

Using the CAPM, we can calculate the required rate of return on a stock. This is the minimum return required by the investors to invest in a stock based on its systematic risk, the market's risk premium and the risk free rate.

The formula for required rate of return under CAPM is,

r = rRF + Beta * (rM - rRF)

Where,

rRF is the risk free rate

rM is the market return

r = 0.037  +  1.22 * (0.116 - 0.037)

r = 0.13338 or 13.338% rounded off to 13.34%

Manley operates a law practice on the accrual method and calendar year. At the beginning of the year Manley's firm had an allowance for doubtful accounts with a balance of $15,000. At the end of the year, Manley recorded bad debt expense of $23,000 and the balance of doubtful accounts had increased to $18,000. What is Manley's deduction for bad debt expense this year?

a. $23,00
b. $3,000
c. $26,000
d. $5,000
e. $20,000

Answers

Answer:

e. $20,000

Explanation:

The computation of the manley deduction for the bad debt expense is shown below:

= Allowance for doubtful debts + bad debt expense - increased in the balance of doubtful debts

= $15,000 + $23,000 - $18,000

= $38,000 - $18,000

= $20,000

hence, the deduction of Manley for the bad debt expense is $20,000

Therefore the correct option is e.

We simply applied the above formula so that the correct value could come

And, the same is to be considered

what do you mean by business organisation ​

Answers

Answer:

Business organization, an entity formed for the purpose of carrying on commercial enterprise.Such an organization is predicated on systems of law governing contract and exchange, property rights, and incorporation.

A company reported the following amounts and balances: Beginning capital balance $45,000, Net Sales $420,000, Cost of Goods Sold $273,000, Total Expenses $112,000, Net Income $35,000, Ending Cash Balance $22,000, Withdrawals $7,200, Ending Accounts Receivable $27,000. What is the Ending Capital Balance?
a. $94,600
b. $38,200
c. $72,800
d. $49,600

Answers

Answer:

c. $72,800

Explanation:

ending capital balance = beginning capital balance + net income - withdrawals = $45,000 + $35,000 - $7,200 = $72,800

Ending capital balance refers to total owners' capital balance after the accounting period is closed. Net income increases owners' capital while withdrawals or dividends decrease it.

BIZZ0 estimated that income for January would be $53,500 and expenses would be $37,250. The actual income was $48,500 and the actual expenses were $35,000. What is the variance for the balance (income − expenses)?

Answers

Answer:

the  variance for the balance is $2,750 favorable

Explanation:

The computation of the variance for the balance is shown below:

= Income - expenses

= (Estimated income - actual income) - (estimated expenses - actual expenses)

= ($53,500 - $48,500) - ($37,250 - $35,000)

= $5,000 - $2,250

= $2,750 favorable

Hence, the  variance for the balance is $2,750 favorable

We simply applied the above formula so that the correct value could come

And, the same is to be considered

Wexim Toys sold merchandise to a customer on credit, terms 2/10, n/30 for $11,700. Three days later, the customer returned $2,300 of the merchandise. When recording the return transaction, Wexim Toys would record:__________
a) $2,300 in the Accounts Payable Cr. column and $2,300 in the Inventory Dr. column of the purchases journal. b) Debit Sales Returns and Allowances $2,300 and credit Accounts Receivable $2,300 in the general journal. c) $2,300 in the Cash Dr. column and $2,300 in the Inventory Cr. column in the cash receipts journal. d) Debit Cash $2,300 and credit Inventory $2,300 in the general journal. e) $2,300 in the Accounts Payable Dr. column and $2,300 in the Cash Cr. column of the cash payments journal.

Answers

Answer:

b) Debit Sales Returns and Allowances $2,300 and credit Accounts Receivable $2,300 in the general journal.

Explanation:

When goods were sold on account,  Accounts receivables is debited, and  Sales is credited.  When goods are returned,  Sales Return & Allowances is debited, and  Accounts receivables is credited.

Thus, the entry will include Debit in Sales Returns and Allowances $2,300 and Credit  in Accounts Receivable $2,300

Fixed costs can be defined as costs that:_______

a. a vary inversely with production.
b. vary in proportion with production.
c. are incurred only when production is large enough.
d. are incurred even if nothing is produced.

Answers

Answer:

d. are incurred even if nothing is produced.

Explanation:

The fixed cost is the cost which remains the same in the case when the production level is increased or decreased or same

Also if nothing is produced still the fixed cost is incurred

Like: rent, depreciation etc

This would remain the fixed . And also cannot be avoided

Therefore the correct option is d.

And other options are wrong

Waterway Industries purchased machinery for $905000 on January 1, 2017. Straight-line depreciation has been recorded based on a $52000 salvage value and a 5-year useful life. The machinery was sold on May 1, 2021 at a gain of $13000. How much cash did Waterway receive from the sale of the machinery?

Answers

Answer:

$ 178,733  

Explanation:

From January 2017 when the machinery was acquired till May 1 2021  when it disposed of, depreciation would have been charged for full years 2017,2018,2019 and 2020 while 2021 depreciation would only be for 4 months.

Annual depreciation=cost-salvage value/ useful life

annual depreciation=($905000-$52000)/5=$170,600  

depreciation for 4 years=$170,600*4=$682,400

depreciation for 4 months=$170,600*4/12=$56,867  

accumulated depreciation=$682,400+$56,867=$739,267  

carrying value=cost-accumulated depreciation= $905000- $739,267 =$165,733  

gain on disposal=cash proceeds-carrying value

$13000=cash proceeds-$165,733  

cash proceeds=$165,733 +$13000=$ 178,733  

What kind of ideas are not patentable according to the U.S. Patent Office?

Answers

1. A discovery, scientific theory or mathematical method.

2. An aesthetic creation.

3. A scheme, rule or method for performing a mental act, playing a game or doing business, or a computer program.

4. A presentation of information.

5. A procedure for surgical or therapeutic treatment, or diagnosis, to be practised on humans or animals.

Answer:

A presentation of information

Explanation:

Alison was just hired around the Grand Stores. She soon learned that all new hires in the company are required to go through mandatory health and drug testing. She consulted her superiors and found that this was not a breach of her privacy right. Which reason for such testing would NOT qualify as a breach of Alisons privacy rights?

A. Pre-employment condition
B. Vacation allotment
C. Fitness for duty
D. Personality assessment

Answers

Answer:

A. Pre-employment condition

Explanation:

The answer is A. because if the testing is a requirement for getting the job then you know beforehand. You're aware of this requirement before they employ you so it's not breaching your privacy rights.

Answer:

a

Explanation:

The company can allow whoever they want into the company and it is their choice to test their employees for drugs.

Why is Apple’s industry so competitive and how could this affect the ethical risks in Apple’s operations?

Answers

Answer:

Apple industry is the consumer goods technological sector.

Explanation:

This sector is very competitive because it tends to be very profitable, which means that it attracts a large number of skilled entrepreneurs and wokers who create high quality products that customers demand. This is specially true of the mobile phone sub-sector, with industry giants like Samsung and Huawei being in stiff competition with Apple.

Because of this, Apple faces several ethical risks: for one, it faces the risk of not practicing predatory pricing techniques like dumping in order to drive out competition, because this would be unfair not only to the other firms, but also to the other companies.

Another ethical risks would be more relevant for managers, and that is that managers should avoid to overestimate their ability to increase profits, because this may create false expectations on the board, on stockholders, and on the customers, leading to malinvestment, and other negative eocnomic consequences.

Click this link to view O*NET's Work Activities section for Architects. Note that common activities are listed toward the
top, and less common activities are listed toward the bottom. According to O*NET, what are common work activities
performed by Architects? Check all that apply.
repairing and maintaining mechanical equipment
communicating with persons outside of the organization
drafting, laying out, and specifying technical devices, parts, and equipment
using dynamic flexibility to repeatedly bend, stretch, or twist with arms or legs
using night vision and peripheral vision
making decisions and solving problems
thinking creatively

Answers

Answer:

communicating with persons outside of the organization

drafting, laying out, and specifying technical devices, parts, and equipment

making decisions and solving problems

thinking creatively

Answer:

B, C, F, G

Explanation:

See attachment

Do you think your career goals will be the same 5 years from now? 10 years from now? Why or why not?

Answers

Answer:

It maybe differ from your age, if you are in middle school now then maybe it may change later. But if you are already a graduate student then the main subject u r focusing in may be your career

The career goals of an individual are definitely subject to change during any given period like 5 years or 10 years. These changes in career goals may occur due to the change in his or her surroundings and other external factors.

What is the significance of career goals?

Career goals can be referred to or considered as such goals that an individual wishes to pursue in order to build his career and gain life and income opportunities. These career goals may be different for different individuals as per their choices.

In fact, the career goals may change for an individual as well over a span of any given period. The reasons for these changes may be unidentified in present. Some factors may be internal, such as change in desire; whereas the external factors include environmental and social changes.

Therefore, the significance regarding the change in career goals of an individual has been aforementioned.

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According to the Institute of Management Accountants (IMA), the final step in resolving an ethical dilemma is to:

Answers

Answer: A. consult your own attorney as to legal obligations and rights concerning the ethical conflict.

Explanation:

After considering the relevant implications of an ethical dilemma, the final step is to reach out to your own lawyer to find out your legal rights as well as obligations concerning the courses of action that are presenting the dilemma.

The logic is that your own attorney should have your best interests at heart and so will tell you what each action could do to you which will then help you decide which course of action to take.

Anthony currently earns $25 an hour and works 40 hours a week. When his boss offers to pay him $29 per hour, Anthony decides to accept the offer, but decides to keep working 40 hours. What is the effect of Anthony's decision on the labor supply curve?

Answers

Answer:

substitution and income effects will counteract each other totally

Explanation:

A labor supply curve is an economic analysis tool that shows the number or workers that are available to work or that can work at various wage rates.

The labor supply curve can either be bending backwards or sloping downwards or upward curving but it shows the relationship between labour and wage rates.

A labor supply curve can be affected by factors such as population, changes in social behaviour, opportunities in other markets, among other things.

From the above question, it is seen that a change in wage rate for Anthony from $25 to $29 does not affect his work hours positively of negatively. His work hours is the same despite the increase in hourly wage.

The effect of the Anthony sticking to 40 hours of work despite an increase in wage, which could have served as some motivation for him to put in more hours is his labor curve remains same. An increase in wage has done noting to affect the number of hours he works and as such his income vs work rate counters each other.

Cheers.

Organizations must use software tools to process data into meaningful information to make _____ useful.

Answers

Answer:

data warehouses

Explanation:

In the science of computing, we can also call a data warehouse, to be an enterprise data warehouse, this is a system that is used for reporting and also analysing data, a data warehouse is known to be a very central part of business intelligence.

Organizations must use software tools to process data into meaningful information to make data warehouses useful.

On January 15, 2021, James Company received a two-month, 4%, $7,000 note from Peter Long for the settlement of his open account. The entry by Jaymes Company on January 15, 2016 would include a:________

a. debit of $7,047 to Notes Receivable.
b. debit of $7,000 to Notes Receivable.
c. credit of $7.047 to Accounts Receivable.
d. credit of $7,000 to Notes Receivable,

Answers

Answer: b. debit of $7,000 to Notes Receivable.

Explanation:

James Company received a Note Receivable of $7,000 from Peter Long to settle the Receivable account so Notes Receivable will increase. As it is an asset, it will be debited when it increases so Note Receivable has to be debited $7,000.

Accounts Receivable will be credited with the same $7,000 indicate that the Receivables account has been settled by the Note.

The entry would include debit of $7,000 to Notes Receivable.

Here, James Company received a Note Receivable of $7,000 from Peter Long to settle the Receivable account, hence, the Notes Receivable will increase.

Since the Notes Receivable is an asset, it will be debited when it increases, thus, Note Receivable has to be debited with the amount of $7,000.

However, the Accounts Receivable will be credited with $7,000 to show that the Receivables account has been settled by the Note.

Hence, the Option B is correct because the entry by Jaymes Company on January 15, 2016 would include debit of $7,000 to Notes Receivable.

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A company is 49% financed by risk-free debt. The interest rate is 8%, the expected market risk premium is 6%, and the beta of the company’s common stock is .59. a. What is the company cost of capital? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Cost of capital

Answers

Answer: 9.81%

Explanation:

Cost of capital = (cost of debt * weight of debt) + ( cost of equity * weight of equity)

Cost of Equity = Risk free rate + beta * Market risk premium

= 8% + 0.59 * 6%

= 11.54%

Cost of capital = (8% * 49%) + (11.54% * 51%)

= 9.81%

At December 31, 2020, the unadjusted balance in Allowance for Doubtful Accounts is a credit of $16,000. Instructions Journalize and post the adjusting entry for bad debts at December 31, 2020. Journalize and post to the allowance account the following events and transactions in the year 2020. March 1, a $1,900 customer balance originating in 2020 is judged uncollectible. May 1, a check for $1,900 is received from the customer whose account was written off as uncollectible on March 1. Journalize the adjusting entry for bad debts on December 31, 2020. Assume that the unadjusted balance in Allowance for Doubtful Accounts is a debit of $2,000, and the aging schedule indicates that total estimated bad debts will be $38,300.

Answers

Answer:

a. Journal Entry

December 31, 2020:

Debit Bad Debts Expense $16,000

Credit Allowance for Doubtful Accounts $16,000

To record bad debts expense.

b. Journal Entries:

March 1, 2020:

Debit Allowance for Doubtful Accounts $1,900

Credit Accounts Receivable $1,900

To record the write-off of uncollectible account.

May 1, 2020:

Debit Accounts Receivable $1,900

Credit Allowance for Doubtful Accounts $1,900

To record the reversal of the March 1, 2020 entries.

Debit Cash $1,900

Credit Accounts Receivable $1,900

To record the receipt of check from the customer.

c. Journal Entries:

Debit Bad Debts Expense $40,300

Credit Allowance for Doubtful Accounts $40,300

To record bad debts expense and bring the Allowance for Doubtful Accounts to a credit balance of $38,300.

Explanation:

a) Adjusting journal entries are recorded at the end of the accounting period to provide for accrued expenses and revenues, expense prepayments, and deferred revenue, including depreciation expense, thereby ensuring that the accounts are reported in accordance with the accrual concept.

what is your view about credit cards in America? Do you think it serves the best interest of Americans or not and why?

Answers

i live in america, and no i don’t think it serves the best interest of americans in my opinion. people can open several credit cards, and they can almost become bankrupt from it.
I live in American and I think it does not serve interest because I would rather have paper money and know exactly how much I have without having to go to the ATM

(Cost of debt) Sincere Stationery Corporation needs to raise $500,000 to improve its manufacturing plant. It has decided to issue a $1,000 par value bond with a 14 percent annual coupon rate and a 10-year maturity. The investors require a 9 percent rate of return. a. Compute the market value of the bonds. b. What will the net price be if flotation costs are 10.5 percent of the market price?

Answers

Answer:

a. $1,320.88

b.  $1,182.19

Explanation:

The computation is shown below:

a. For market value of the bond

Given that

Rate = 9%

NPER = 10

PMT = $1,000 * 14% = $140

FV = $1,000

The formula is shown below:

= -PV(RATE;NPER;PMT;FV;TYPE)

After applying the above formula, the present value is $1,320.88 i.e. equivalent to the market value of the bonds

b. Now the net price be

= Market price × (1 - flotation cost)

= $1,320.88 × (1 - 0.105)

= $1,182.19

EXERCISE 5–2 Prepare a Cost-Volume-Profit (CVP) Graph LO5–2 Karlik Enterprises distributes a single product whose selling price is $24 per unit and whose variable expense is $18 per unit. The company’s monthly fixed expense is $24,000. Required: 1. Prepare a cost-volume-profit graph for the company up to a sales level of 8,000 units. 2. Estimate the company’s break-even point in unit sales using your cost-volume-profit graph.

Answers

Answer:

Cost volume profit analysis (CVP) refers basically to determining the break-even point of a company and how we can use that information to predict how different changes might affect it. When you are performing a CVP analysis you have to decide which variables will be constant, i.e. ceteris paribus, and which will be altered to predict the effect on the company’s operating income.

1)

sales level     total revenue    variable costs      fixed costs      total costs

2,000             48,000             36,000                 24,000            60,000

4,000             96,000             72,000                 24,000            96,000

6,000            144,000           108,000                 24,000           132,000

8,000            192,000           144,000                 24,000           168,000

2) break even point = 4,000 units

When the price volume profit analysis (CVP) refers basically to determine the break-even point of a corporation and also how we will use that information to predict how different changes might affect it. after you are performing a CVP analysis you've got to come to a decision which variables are going to be constant that's ceteris paribus, and also which is able to be altered to predict the effect on the company’s operating income.

1) Cost volume

sales level     total revenue    variable costs      fixed costs      total costs

2,000             48,000             36,000                 24,000            60,000

4,000             96,000             72,000                 24,000            96,000

6,000            144,000           108,000                 24,000           132,000

8,000            192,000           144,000                 24,000          168,000

2) thus, reach point = 4,000 units

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The PE ratio: Assuming Net Income for the year is $250,000, what is the net cash flows from operating activities given the following information: Increase in Salaries Payable $ 19,500 Depreciation Expense $ 9,500 Increase in Prepaid Rent $ 27,500 Loss on sale of asset $ 1,250 Increase in Accounts Payable $ 29,500 Increase in Inventory $ 93,000 Multiple Choice

Answers

Answer:

Net operating cash flow = $189,250

Explanation:

Particulars                                    Amount$

Net income                                    250,000

Add:depreciation expense           9,500

Add:loss on sale of asset              1,250

Add:increase in salary payable    19,500

Less:increase in prepaid rent       (27,500)

Add:increase in AP                        29,500

Less:increase in inventory            (93,000)

Net operating cash flow              $189,250

A firm is deciding between two different sewing machines. Technology A has fixed costs of $500 and marginal costs of $50 whereas Technology B has fixed costs of $250 and marginal costs of $100. At what quantity is the firm indifferent between the two technologies?

Answers

Answer: 5 units

Explanation:

Use equations.

Cost of Producing with Tech A;

= 500 + 50Q

Cost of Producing with Tech B;

= 250 + 100Q

Point of indifference;

500 + 50Q = 250 + 100Q

500 - 250 = 100Q - 50Q

50Q = 250

Q = 5 units

Costs that can be traced to a cost object in a cost-effective way are called direct costs.
a) true
b) false

Answers

Answer:

a) true

Explanation:

Costs that can be traced to a cost object in a cost-effective way are called direct costs. Sometimes they can literally be seen on the cost object by observation. For example the wood on the table.

Downing Company issues $4,000,000, 8%, 5-year bonds dated January 1, 2020 on January 1, 2020 (ten periods). The bonds pay interest semiannually on June 30 and December 31. The bonds are issued to yield 5%. What are the proceeds from the bond issue?

Answers

Answer:

$4,525,123.84

Explanation:

The computation of the proceeds from the issuance of the bond is shown below:

Given that

Face Value of Bonds = $4,000,000

Annual Coupon Rate = 8%

So, Semiannual Coupon Rate = 4%

So, Semiannual Coupon = 4% × $4,000,000

= $160,000

Time to Maturity = 5 years

So, Semiannual Period = 10

And,

Annual Interest Rate = 5%

So, Semiannual Interest Rate = 2.5%

Now the proceeds from the issuance of the bond is

= $160,0000 × PVIFA(2.5%, 10) + $4,000,000 × PVIF(2.5%, 10)

= $160,000 × 8.752064  + $4,000,000 × 0.78120

= $1,400,330.23  + $3,124,793.61

= $4,525,123.84

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