Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. selected information for morgan inc for a recent f

Selected information for Morgan Inc for a recent fiscal year (year ending 6/30/2023) is presented...

50.1K

Verified Solution

Question

Accounting

Selected information for Morgan Inc for a recent fiscal year (year ending 6/30/2023) is presented below (dollar amounts in millions):
Note (Maturity Date) Reported Book Value, 6/30/2023 Reported Book Value, 6/30/2024 Stated Interest Rate Effective Interest Rate
@ date notes were issued
October 1,20251,0001,0003.00%3.14%
May 1,20289991,0002.38%2.47%
December 6,20332,0441,9933.13%3.22%
Required:
(1) Are the October 1,2025 notes issued at par, at a discount, or at a premium? Why?
(2) Are the May 1,2028 notes recorded at a discount or a premium? Why?
(3)(a) Are the December 6,2033 notes recorded at a discount or a premium? Why? (b) What explains the decrease in the notes from the beginning to the end of the fiscal year?
(4) Assume that Moody's reports that the October 1,2025 notes were originally rated as Aaa. (a) If Moody's lowers the rating to Aa1(which signals an increase in risk), what is the effect on the effective interest rate? Would it be higher, lower or the same? (b) If the notes had been secured by collateral, would the effective interest rate have been higher, lower, or the same?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students