Should any other factors be considered in the interest cost

Assignment Help Finance Basics
Reference no: EM131410991

On September 30, 2011, Print-O-Matic Inc. entered into an arrangement with its bank to borrow $250,000. The principal is due on October 1, 2016, and the note has a stated annual interest rate of 10 percent. Under the borrowing agreement, Print-O-Matic agreed to maintain a compensating balance of $60,000 in a non-interest-bearing account. As of December 31, 2011, Print-O-Matic has an additional $225,000 in various savings and checking accounts that earn an annual rate of 6 percent. The controller intends to classify the entire $285,000 in cash as a current asset.

REQUIRED:

a. Do you agree with the classification of the $285,000 of cash as a current asset? Explain your answer. b. Print-O-Matic reported interest expense associated with this note for the year ended December 31, 2011, in the amount of $6,250 [($250,000 × 10%) × 1/4]. Do you agree with this classification? Should any other factors be considered in the interest cost? Explain.

Reference no: EM131410991

Questions Cloud

Perspectives of lucy dawidowicz : Compare and contrast the perspectives of Lucy Dawidowicz (intentionalist) and Raul Hilberg (moderate functionalist) on the causes of the Holocaust.
What are your chances of being in the sample each day : Suppose you are in a class of 100 individuals represented by these stick figures. Your teacher randomly selects 10 people each class period and asks them to answer a question about the reading assignment. What are your chances of being in the samp..
Display a histogram of the 50 means of the chosen samples : Display a histogram of the 50 means of the chosen samples.- Describe the histogram in part (a), including shape, center, and spread.
Amendments in the bill of rights : Choose one of the Amendments in the Bill of Rights and explain why you believe, based on the reading, this Amendment was added, and do you agree with Hamilton that the Amendment was not really needed?
Should any other factors be considered in the interest cost : Do you agree with the classification of the $285,000 of cash as a current asset? Explain your answer. b. Print-O-Matic reported interest expense associated with this note for the year ended December 31, 2011, in the amount of $6,250 [($250,000 × 1..
Arguments for and against going to war with mexico : What are the opposing arguments for and against going to war with Mexico? What is the central argument being made in Giddings's speech? What is the central argument being made in Polk's address?
Discuss role of the director of national board in conflict : Discuss the role of the director of the national board in this conflict. Given the different levels of board maturity, what could the board members have done differently?
Display a box plot of the 20 sample means : What is the median of the 20 sample means?-  What is the range of the 20 sample means?- Display a box-plot of the 20 sample means.
Significant contribution of the railroad industry : A) What was the most significant contribution of the railroad industry to America in the second half of the 1800s? B) What was the greatest contribution to industrial development and by whom?

Reviews

Write a Review

Finance Basics Questions & Answers

  Why do researchers use expericorr designs

How many interactions can be tested in a 2 x 2 design? In a 3 x 3 design? In a 2 x 2 x 3 design?

  How much is annual cash flow associated with the perpetuity

A perpetuity with the first annual cash flow paid at the beginning of year 5 is equivalent to receiving $109,000 in 18 years' time. Assume that the perpetuity and the lump sum are of equivalent risk and that j12 = 14.32% pa is the appropriate interes..

  Create the acquisition analysis as of acquisition date

garth company acquired 70 of the outstanding common stock of brooks company on june 30 2011 for 331100. on that date

  What would you do if you decided to invest the money

Suppose you win the lottery. What would you do if you decided to invest the money in the market? How would you diversify your portfolio and why?

  Computation of the present value of the contract

Computation of the present value of the contract and what was the present value of this contract in January when Schneider signed it

  Discussing current view that race is social construction

Write a 1,050- to 1,400-word paper discussing the current view that race is a social construction supported by political realities.  Include the following:

  How much money will you have 11 years from now

You deposit $600 today, $600 one year from now, and $1000 five years from now into an account that earns 4% compounded annually. How much money will you have 11 years from now?

  What was the percentage change in the real exchange rate

What was the percentage change in the real exchange rate during the year? What was the percentage change in the relative purchasing power of the franc? What was the percentage change in the relative purchasing power of the yen?

  What must the beta be for the other stock

You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.14 and the total portfolio is equally as risky as the market, what must the beta be for the other stock in your portfolio?

  Finding net income and effective tax rate

Finding net income and effective tax rate from given financial ratios - Compute the Company's 2007 pro-forma net income (or adjusted net earnings) that is indicative of the Company's net income going forward

  Researcher measures job satisfaction among married

A researcher measures job satisfaction among married, single, and divorced employees to determine whether marital status can influence job satisfaction. Based on the following description in APA format, state the value for k, N, and n.A one-way an..

  Company x is 60 debt-financed and the expected return on

company x is 60 debt-financed and the expected return on its debt is 6. its equity beta is 2. risk-free rate of return

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd