You had $\$10,000$ to invest. You put $x$ dollars in a safe, government-insured certificate of deposit paying $5\%$ per year. You invested the remainder of the money in noninsured corporate bonds paying $12\%$ per year. Your total interest earned at the end of the year is given by the algebraic expression

$$0.05x + 0.12(10,000 - x).$$

a. Simplify the algebraic expression. b. Use each form of the algebraic expression to determine your total interest earned at the end of the year if you invested $\$6000$ in the safe, government-insured certificate of deposit.

Consider the growth of the following virus. A new virus has been created and is distributed to 100 computers in a company via a corporate E-mail. From these workstations the virus continues to spread. Let t=0 be the time of the first 100 infections, and at t=17 minutes the population of infected computers grows to 200. Assume the anti-virus companies are not able to identify the virus or slow its progress for 24 hours, allowing the virus to grow exponentially.

What will the population be after 1 hour 30 minutes?

Consider the growth of the following virus. A new virus has been created and is distributed to 100 computers in a company via a corporate E-mail. From these workstations the virus continues to spread. Let t=0 be the time of the first 100 infections, and at t=17 minutes the population of infected computers grows to 200. Assume the anti-virus companies are not able to identify the virus or slow its progress for 24 hours, allowing the virus to grow exponentially.

What will the population of the infected computers be after 1 hour?

Given the data in the accompanying table, would you say that this economy is heading for a boom or for a recession? Explain your choice.

$$\begin{array}{l} &\text{3-month}&\text{10-year}&\text{ Baa corporate}\\ &\text{Treasury-bill}&\text{Treasury bond}&\text{10-year bond}\\ \hline \text{January}&1.00\%&3.0\%&7.0\%\\ \text{February}& 1.05&3.5&7.2\\ \text{March}&1.10&4.0&7.6 \\ \text{April}& 1.20 &4.6&8.0 \\ \text{May}&1.25 &5.0 &8.2\\ \end{array}$$

Auditors give a type of certification of corporate fi nancial statements. Certification is used in many other aspects of business as well. For example, it plays a critical role in the sustainability movement. The February 7, 2012, issue of the New York Times contained an article by S. Amanda Caudill entitled “Better Lives in Better Coffee,” which discusses the role of certification in the coffee business.

Instructions
Read the article and answer the question below.

According to the author, which certification is most common among coffee growers? What are the possible reasons for this?

Suspect Company issued $600,000 of 9 percent first mortgage bonds on January 1, 20X1, at 103. The bonds mature in 20 years and pay interest semiannually on January 1 and July 1. Prime Corporation purchased$400,000 of Suspect's bonds from the original purchaser on December 31, 20X5, for $397,000. Prime owns 60 percent of Suspect's voting common stock.

Required

Prepare the worksheet consolidation entry or entries needed to remove the effects of the inter-corporate bond ownership in preparing consolidated financial statements for 20X6.

Stave Company invests $10,000,000 in 5% fixed rate corporate bonds on January 1, 2020. All the bonds are classified as available-for-sale and are purchased at par. At year-end, market interest rates have declined, and the fair value of the bonds is now$10,600,000. Interest is paid on January 1. Prepare journal entries for Stave Company to (a) record the transactions related to these bonds in 2020, assuming Stave does not elect the fair option; and (b) record the transactions related to these bonds in 2020, assuming that Stave Company elects the fair value option to account for these bonds.

The exchange rate as a self-stabilizing mechanism: Think about an economy that experiences a decline in corporate confidence (which tends to reduce investment). The uncovered interest parity requirement is denoted by UIP. Instead, imagine a set exchange rate for the economy. Show how the economy reacts to the decline in company confidence in an IS-LM-UIP diagram. What must happen to the money supply if the exchange rate is to remain fixed? How does the impact on output in this economy of fixed exchange rates compare to the impact on output in the economy of flexible exchange rates that you discovered in the previous section?

The newest law firm in town paid a total of $\$ 33,860$ to a marketing firm for the research and development of the firm's corporate trade name and trademark. From this budget, a Web-site developer was paid $\$ 9,475$ for her creative work on the project. Her salary was what percentage of the entire amount?

Division When solving problems that involve percents, it is usually a matter of dividing one value by another.

Starting Hints To solve this problem, divide the salary of the Web-site developer by the total amount paid to the marketing firm to determine what percent the developer's salary was of the total.

The CEO of the Consolidated Hands of Help, a nonprofit New York Corporation, was shown to be using corporate funds to maintain several limos and various houses for himself around the country. He responded that he needed these to enable him to better recruit donors. The board of directors agreed with his position. A shareholder brought suit claiming that more than 12,000 homeless people could be helped for what was being paid for the luxury items. The suit sought to recover the expenditures from the CEO and the board members. Will it be successful? Why or why not?

Sara Lee Corp., maker of food, beverage, and household products, is known mainly for its baked products, marketed under its corporate name. For the five years ending July 1 of each year from 2002 to 2006, their bakery division reported the following profits.

c) Think about the exponential smoother. If the parameter were$0.8$would you expect the prediction to be higher or lower? What if it were$0.2$? Describe.

Match (by letter) the following terms with their definitions. Each letter is used only once.

$$\begin{matrix} \text{Terms}\\ \hline \text{\_\_\_\_\_ 1. Publicly held corporation.}\\ \text{\_\_\_\_\_ 2. Organization chart.}\\ \text{\_\_\_\_\_ 3. Articles of incorporation.}\\ \text{\_\_\_\_\_ 4. Limited liability.}\\ \text{\_\_\_\_\_ 5. Initial public offering. }\\ \text{\_\_\_\_\_ 6. Double taxation.}\\ \text{\_\_\_\_\_ 7. S corporation.}\\ \text{\_\_\_\_\_ 8. Limited liability company.}\\ \end{matrix}$$

$$\begin{matrix} \text{Definitions}\\ \hline \text{a. Shareholders can lose no more than the amount they invest in the company.}\\ \text{b. Corporate earnings are taxed twice-at the corporate level and individual shareholder level.}\\ \text{c. Like an S corporation, but there are no limitations on the number of owners as in an S corporation.}\\ \text{d. Traces the line of authority within the corporation.}\\ \text{e. Allows for legal treatment as a corporation, but tax treatment as a partnership.}\\ \text{f. Has stock traded on a stock exchange such as the New York Stock Exchange (NYSE).}\\ \text{g. The first time a corporation issues stock to the public.}\\ \text{h. Describes (a) the nature of the firm's business activities, (b) the shares to be issued, and (c) the composition of the initial board of directors.}\\ \end{matrix}$$

Suspect Company issued $600,000 of 9 percent first mortgage bonds on January 1, 20X1, at 103. The bonds mature in 20 years and pay interest semiannually on January 1 and July 1. Prime Corporation purchased$400,000 of Suspect's bonds from the original purchaser on December 31, 20X5, for $397,000. Prime owns 60 percent of Suspect's voting common stock.

Required

Prepare the worksheet consolidation entry or entries needed to remove the effects of the inter-corporate bond ownership in preparing consolidated financial statements for 20X5.

Suspect Company issued $600,000 of 9 percent first mortgage bonds on January 1, 20X1, at 103. The bonds mature in 20 years and pay interest semiannually on January 1 and July 1 . Prime Corporation purchased$400,000 of Suspect's bonds from the original purchaser on January 1, 20X5, for $396,800. Prime owns 60 percent of Suspect's voting common stock.

Required

Prepare the worksheet consolidation entry or entries needed to remove the effects of the inter-corporate bond ownership in preparing consolidated financial statements for 20X6.