QUESTION The contractual interest rate is always stated as a(n) OA daily rate. B
ID: 2333195 • Letter: Q
Question
QUESTION The contractual interest rate is always stated as a(n) OA daily rate. B. semiannual rate O C monthly rate D annual rate QUESTION9 Able Electronics Company issues a $1,000 000 8% 20-year mortgage note on January 1 The terms provide for annual installment payments, exclusive of real estate taxes and insurance, of $101,852 After the first installment payment, the principal balance is A S920.000 $978.148 C S898.148 D $1,000,000 QUESTION 10 A corporation has the following account balances. Common stock, $1 par value, 30,000, Paid-in Capital in Excess of Par, $650,000. Based on this information, the O A average price per share issued is $11.25 B legal capital is S680.000 C number of shares outstanding is 680,000 D number of shares issued is 30,000Explanation / Answer
Answers
The correct answer is Option ‘D’ Contractual interest rate is ALWAYS stated as an ANNUAL rate.
Example: Bonds were issued at 8%, interest payable semi-annually. Here 8% is annual interest rate.
-First instalment contains principle portion plus interest portion.
-Interest portion = 1000000 x 8% = $80,000
-Total Installment = $ 101,852
-Hence, principle repaid amount = 101852 – 80000 = $ 21,852
-Principal balance remaining after first instalment = 1000000 – 21852 = $ 978,148
-Correct Answer = Option ‘B’ $ 978,148
_Correct answer is Option ‘D’ No. of shares issued is 30,000
-This is because par Value = $1 per share, and Common Stock Value shown is $ 30,000
-hence no. of shares = $ 30,000 / $1 per share = 30,000 shares issued.