Question

For the investment made by Company Baldwin, funded with bonds and equity, which of the following statements are true?

The plant investment was $57,019,351.
The bonds had a face value of $34,685,144 at 13.8% interest.
Equity invested was $22,334,207.
Depreciation is over 15 years straight line.

Answer 1

A bond is similar to a bank loan from a firm's point of view, but they differ in how they are obtained. Company Baldwin's plant investment was funded with bonds and equity. To calculate home equity, subtract the loan amount from the total home value.

Step-by-step explanation:

A bond is similar to a bank loan from a firm's point of view in that both involve borrowing money that needs to be repaid with interest. However, they differ in that a bond is typically issued by a company or government entity and sold to investors, while a bank loan is obtained directly from a financial institution.

In the case of Company Baldwin, the plant investment was funded with both bonds and equity. The face value of the bonds was $34,685,144 with a 13.8% interest rate. The equity invested was $22,334,207.

To calculate the equity each person has in their home:

1. Calculate the value of the home loan: $200,000 - (10% of $200,000) = $180,000
2. Subtract the loan amount from the total home value to get the equity: $200,000 - $180,000 = $20,000