Business Administration 2257 Lecture 2: EXAM 2 Cheat Sheet

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= market rate /2 n = years * 2. Interest = face value * coupon rate * (mo. /12) * if market rate > coupon rate, discount: price < face value. * if market rate < coupon rate, premium: price > face value. = (cv x market rate x n/12) * % recalled. = (fv x coupon rate x n/12) * % recalled. If loss, also dr. loss on recall (expense) * keep in mind the number of bonds (watch for recalls and dates of issuance!!!) No substanial transfer of risk and rewards incidental to ownership. 1st scenario: incepion of lease this fiscal year. Need 3 things: annual payment, interest rate, length of lease. ** note: ignore list price & ul ** Put lease on books n = years of lease 1 i = interest payment/ year. Lease value = one payment + (pv factor 2) (one payment) Current lease obligaion x interest rate x n/12.

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