Problems Portion of Test. There are six problems. Each one is worth the score indicated next to the problem number. Show all work for complete credit (or partial credit). You may attach extra pages if you so desire. Please be NEAT when writing your answers. I cannot grade illegible work. (40 points possible) 1. (10 noints) Fichelherger Trucking won a settlement in a lawsuit and was offered four different payment alternatives by the defendant's insurance company. The interest rate is 6%. Ignoring the tax considerations, which of the following four alternatives has the highest present value (and thus is the best option)? Support your answer with the appropriate calculations. 1) $180,000 now. 2) $52,000 per year for the next 4 years (end-of-year payments) 3) $5,000 now and then $24,000 per year for the next 10 years (end-of-year payments). Hint: Calculate the present value of the initial $5,000 separately. Then calculate the present value the $24,000 annuity separately. Finally, add the two present value amounts together to get the overall present value. 4) $9,100 per year for the next 10 years (end-of-year payments) plus a lump sum payment of $200,000 at the end of the 11th year. Hint: Calculate the present value of the $9,100 10-year annuity separately. Then calculate the present value the $200,000 payment received at the end of year 11 separately. Finally, add the two present value amounts together to get the overall present value. 3. (7 points) Kilgore Auto Parts reported the following information at December 31, 2004: 1. How many shares of common stock are issued? 2. How many shares of preferred stock are issued? 3. How many shares of common stock are outstanding? 4. What was the average price paid for the treasury shares when the company reaquiced them? 5. What is the dividend PER SHARE that preferred shareholders are entitled to when a dividend is declared? 6. What was the average price of common shares when they were issued? 7. If a 45% stock dividend were issued, by how much would the total stockholders' equity balance change? 2. (10 points) Mazeltok Corporation issued $100,000 3-year, 8% stated rate bonds on January 1, 2004. The bonds pay interest semi-annually and were sold when the market rate was 10%. a. Calculate the issue price of the bonds. b. Prepare an amortization schedule for the bonds (use the table below): c. Record the interest expense entry for the 6/30/05 interest payment: 5. (4 points) Dividend Allocation Durden Co. has $10 par value, 12% cumulative preferred stock. There are 10,000 shares issued and outstanding of the preferred stock. The company also has 100,000 shares of $1 par value common stock. No dividends had been paid in the years 2003,2004,2005, and 2006 . In 2007 , the company paid $35,000 in dividends. In 2008 , the company paid $65,000 in dividends. Determine the allocation of dividends between preferred and common stockholders for 2007 and 2008. 6. (4 noints) Equity transactions For each of the following independent transactions a through d, prepare the necessary journal entry (if necessary): (a) Declared and paid a $0.40 per share cash dividend on 100,000 shares of prefered stock outstanding. (b) Declared and distributed a 10% stock dividend on 400,000 shares of $5 par value common stock outstanding. Market price per common share on this date was $25. (c) Declared and distributed a 2 -for-1 stock split on 500,000 shares of $10 par value common stock outstanding. (d) Declared and distributed a 40% stock dividend on 400,000 common shares of $5 par value common stock outstanding. Market price per common share on this date was $20