Calculate total interest expense that will be recorded on the books from January 2, 20X2, through December 31, 20X9 (assume zero interest expense during 20X1).

 

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The Corporation & Industry Financial Ratios Return on Equity Dividend Payout Return on Assets Return on Sales Asset Turover Current Ratio Quick Ratio DebAssets Accounts Receivable Days Inventory Days Accounts Payable Days Summary: Cash Conversion Days 20X11 0.41 0.04 0.15 0.13 1.21 2.84 1.92 0.54 28.01 47.53 26.59 48.95 20X10 20X11/20X10 Industry 0.16 0.33 0.04 0.15 0.14 1.06 2.61 1,74 0.48 30.48 52.79 29.75 53.51 0.12 0.09 0.09 0.90 2.75 1.82 0.20 32.01 49.53 24.59 56.95 Other Information • Bonds Payable: On December 31, 20X1, the firm issued 1,000 bonds with a 20-year maturity. The bonds pay interest every six months (June 30 and December 31), and the yield to maturity effective interest rate is 10 percent. • Stock Price-Firm. The market price of the stock (per the stock exchange) was $34 at year-end 20X11, $26 at year-end 20X10, $22 at year-end 20X9, and $17 at year-end 2005. • Market Information: The average return in the market over 20x9-20X11 is 12 percent, and its standard deviation 6.50 percent • Treasury Bonds: The average rate on U.S. Treasury bonds was 5 percent. • Stock Shares: The firm has 600,000 authorized shares and 200,000 issued, and 126,000 outstanding at year-end 20x11. • Stock Valuation Data: The required rate of return demanded by investors approximates 17 percent. The firm's beta is 1.75. The firm estimates that the growth rate in dividends is 20% for 20X12 and 20X13, and 14% for all years thereafter. • Treasury Stock: The firm had zero treasury stock at year-end 20x8. The firm purchased 4,000 treasury shares at year-end 20x9, 44,000 at year-end 20X10, and 26,000 at year-end 20X11. There were no sales of treasury stock during this period-only purchases of treasury stock, Financial Ratio Formulas . Return on Equity: Net Income/Average Stockholders Equity Dividend Payout: Dividends Declared/Net Income . Return on Assets: Net Income/Average Total Assets Asset Turnover: Total Sales/Average Assets Current Ratio: Current Assets/Current Liabilities • Quick Ratio: (Cash - Marketable Securities + AR/Current Liabilities • Debl-Asset Ratio: Total Liabilises/Total Assets • Accounts Receivable Days: 385/A/R Turnover • Inventory Days: 365/Inventory Turnover Accounts Payable: 365/A/P Turnover • Cash Conversion Days: A/R Days Inventory Days - A/P Days • A/R Turnover: Total Sales/Average Accounts Receivable Inventory Turnover: Total Cost of Goods Sold Expense/Average Inventory. • Accounts Payable Tumover: Purchases/Average Accounts Payable. The Corporation & Industry Financial Ratios Return on Equity Dividend Payout Return on Assets Return on Sales Asset Turover Current Ratio Quick Ratio DebAssets Accounts Receivable Days Inventory Days Accounts Payable Days Summary: Cash Conversion Days 20X11 0.41 0.04 0.15 0.13 1.21 2.84 1.92 0.54 28.01 47.53 26.59 48.95 20X10 20X11/20X10 Industry 0.16 0.33 0.04 0.15 0.14 1.06 2.61 1,74 0.48 30.48 52.79 29.75 53.51 0.12 0.09 0.09 0.90 2.75 1.82 0.20 32.01 49.53 24.59 56.95 Other Information • Bonds Payable: On December 31, 20X1, the firm issued 1,000 bonds with a 20-year maturity. The bonds pay interest every six months (June 30 and December 31), and the yield to maturity effective interest rate is 10 percent. • Stock Price-Firm. The market price of the stock (per the stock exchange) was $34 at year-end 20X11, $26 at year-end 20X10, $22 at year-end 20X9, and $17 at year-end 2005. • Market Information: The average return in the market over 20x9-20X11 is 12 percent, and its standard deviation 6.50 percent • Treasury Bonds: The average rate on U.S. Treasury bonds was 5 percent. • Stock Shares: The firm has 600,000 authorized shares and 200,000 issued, and 126,000 outstanding at year-end 20x11. • Stock Valuation Data: The required rate of return demanded by investors approximates 17 percent. The firm's beta is 1.75. The firm estimates that the growth rate in dividends is 20% for 20X12 and 20X13, and 14% for all years thereafter. • Treasury Stock: The firm had zero treasury stock at year-end 20x8. The firm purchased 4,000 treasury shares at year-end 20x9, 44,000 at year-end 20X10, and 26,000 at year-end 20X11. There were no sales of treasury stock during this period-only purchases of treasury stock, Financial Ratio Formulas . Return on Equity: Net Income/Average Stockholders Equity Dividend Payout: Dividends Declared/Net Income . Return on Assets: Net Income/Average Total Assets Asset Turnover: Total Sales/Average Assets Current Ratio: Current Assets/Current Liabilities • Quick Ratio: (Cash - Marketable Securities + AR/Current Liabilities • Debl-Asset Ratio: Total Liabilises/Total Assets • Accounts Receivable Days: 385/A/R Turnover • Inventory Days: 365/Inventory Turnover Accounts Payable: 365/A/P Turnover • Cash Conversion Days: A/R Days Inventory Days - A/P Days • A/R Turnover: Total Sales/Average Accounts Receivable Inventory Turnover: Total Cost of Goods Sold Expense/Average Inventory. • Accounts Payable Tumover: Purchases/Average Accounts Payable.

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To calculate the total interest expense recorded on the books from January 2 20X2 through December 3... View the full answer