At what amount should this building be capitalized

Assignment Help Econometrics

Reference no: EM131410542

Morrow Enterprises purchased a building on January 1, 2012, in exchange for a three-year, non-interest-bearing note with a face value of $693,000. Independent appraisers valued the building at $550,125.

a. At what amount should this building be capitalized?

b. Compute the present value of the note's future cash flows, using the following discount rates:

(1) 6 percent

(2) 8 percent

(3) 10 percent

c. What is the effective interest rate of this note?

d. Explain how one could more quickly compute the effective interest rate on the note.

Reference no: EM131410542

Questions Cloud

Maximum speed of the ball : A 0.050kg ball at the end of a string rotates at constant speed in a vertical circle with a radius of 0.23m. What is the maximum speed of the ball so that the tension is not to exceed 11N?

What new challenges might given additional work create : What other services besides traditional accounting can the firm offer to its clients? What new challenges might this additional work create?

Cash flows for a capital project : Given the following cash flows for a capital project, calculate the Payback period, NPV, PI, IRR, and MIRR. The required rate of return is 8 percent.

Calculate the projected cash disbursements for same months : Joseph Pharmacy had sales of $25,000 in December and $30,000 in January. The company expects sales of $20,000 in February and $40,000 in both March and April, and $30,000 in May. The company has no other source of cash inflows. Half of the sales ..

At what amount should this building be capitalized : Morrow Enterprises purchased a building on January 1, 2012, in exchange for a three-year, non-interest-bearing note with a face value of $693,000. Independent appraisers valued the building at $550,125.

What should you do in given condition : You immediately notify the controller, whose response is, "Let it go, it happens often. It'll probably balance out on some future transaction." What should you do now?

What is the porosity of the core : What is the porosity of the core? What would the porosity be if instead tge core had just barely floated in the water?

Compute the effective interest rate on the note payable : Will the interest expense recognized in the third year be greater than, equal to, or less than the interest expense recognized in the second year?

Did you agree or disagree with the author point of view : Did you agree or disagree with the Author's point of view? Why or why not? What did you find most interesting in the chapter? What is something new that you learned from the chapter? How can you apply this to your own life

User Account

All Pages