Accounting Tools

APRIL 12, 2024

What is a Discount Rate in Finance? A discount rate is the interest rate used to discount a stream of future cash flows to their present value. Depending upon the application, typical rates used as the discount rate are a firm's cost of capital or the current market rate.

Financial Analysis 40

Financial Analysis Budgeting 40

Accounting Tools

JUNE 21, 2023

Related Courses Accounting for Investments Corporate Finance GAAP Guidebook The issue price of a bond is based on the relationship between the interest rate that the bond pays and the market interest rate being paid on the same date. for the interest payments. for the interest payments.

Corporate Finance 75

Corporate Finance Accounting Accounting 75

Accounting Tools

MARCH 8, 2024

What is a Contractual Interest Rate? A contractual interest rate is the specific rate included within the terms of a note payable or bond payable. This rate is multiplied by the face amount of the note or bond to derive the amount of interest actually paid to a note or bond holder.

Corporate Finance 40

Corporate Finance Accounting Accounting 40

Accounting Tools

APRIL 17, 2024

When a company issues bonds , investors may pay more than the face value of the bonds when the stated interest rate on the bonds exceeds the market interest rate. Accordingly, investors are willing to pay more than the face value of the bonds, which drives down the effective interest rate that they receive.

Corporate Finance 40

Corporate Finance Accounting Accounting 40

Accounting Tools

MAY 15, 2024

These investments are commonly used when a business has a short-term excess of funds on which it wants to earn interest , but which will be needed to fund operations within the near future. These types of investments are usually very safe, but also have quite a low rate of return.

Corporate Finance 40

Corporate Finance Billing 40

Accounting Tools

SEPTEMBER 10, 2023

Related Courses Corporate Cash Management Corporate Finance Treasurer's Guidebook What is a Fixed Rate Loan? A fixed rate loan is a lending arrangement in which the interest rate charged does not change for the life of the loan.

Corporate Finance 40

Corporate Finance 40

Accounting Tools

DECEMBER 26, 2023

The issuer is obligated to make a series of interest payments to the bond holders over the life of the bond, and to buy back the bonds at their maturity date. The Present Value of a Bond The issuer may have an interest in paying off the bond early, so that it can refinance at a lower interest rate. This amount is 3.9927.

Corporate Finance 40

Corporate Finance Computation Accounting Accounting 40

Accounting Tools

JULY 17, 2023

Related Courses Corporate Finance Treasurer's Guidebook What is the Market Interest Rate? The market interest rate is the prevailing interest rate offered on cash deposits.

Deposits 40

Deposits Corporate Finance 40

Accounting Tools

OCTOBER 27, 2023

Related Courses Corporate Finance Excel Formulas and Functions Treasurer's Guidebook What is the Nominal Interest Rate? The nominal interest rate is the interest percentage stated in a contractual lending arrangement.

Corporate Finance 40

Corporate Finance 40

Accounting Tools

OCTOBER 4, 2023

It is extremely unusually for a bond to trade at its exact face value, since the current market interest rate is always varying, either above or below the interest rate implied by the coupon amount of a bond. However, the market interest rate at the time of the bond sale is 7%.

Corporate Finance 40

Corporate Finance Accounting Accounting 40

Accounting Tools

JANUARY 24, 2024

One reason for the deep discount is that the stated interest rate on the bond is well below the current market rate. Another possible reason is that the issuer has quite a low credit rating , so that investors demand a high effective interest rate in order to hold the issuer’s bonds.

Corporate Finance 40

Corporate Finance Accounting Accounting 40

Accounting Tools

FEBRUARY 1, 2024

A certificate of deposit is a term bank deposit with a fixed duration and stated interest rate. A certificate of deposit normally pays a fixed interest rate upon maturity, though some variable-rate versions are available. What is a Certificate of Deposit? A CD is essentially a promissory note issued by a bank.

Deposits 40

Deposits Corporate Finance 40

Accounting Tools

OCTOBER 26, 2023

Related Courses Corporate Finance Treasurer's Guidebook The weighted average interest rate is the aggregate rate of interest paid on all debt. The calculation for this percentage is to aggregate all interest payments in the measurement period, and divide by the total amount of debt.

Corporate Finance 40

Corporate Finance 40

Accounting Tools

SEPTEMBER 23, 2023

This is classified as a liability on the books of the issuer , and is amortized to interest expense over the remaining life of the bonds. The net effect of this amortization is to reduce the amount of interest expense associated with the bonds. Example of Premium on Bonds Payable A bond with a stated interest rate of 8% is sold.

Corporate Finance 40

Corporate Finance Accounting Accounting 40

Accounting Tools

SEPTEMBER 22, 2023

Related Courses Corporate Cash Management Corporate Finance Treasurer's Guidebook What is a Variable Rate Loan? A variable rate loan is a lending arrangement under which the interest rate varies in accordance with changes in a standard rate. Treasury securities.

Corporate Finance 40

Corporate Finance 40

Intuit

SEPTEMBER 13, 2023

However, we also need to address the issue beyond the current job market. Bridging the gender gap in the industry starts with figuring out how to get women interested in tech (or see entering the tech industry as an option) earlier in their careers. In addition to boosting revenue, women improve other aspects of the IT industry.

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Accounting Tools

OCTOBER 8, 2023

Related Courses Excel Formulas and Functions Financial Analysis Introduction to Excel What is the Effective Interest Rate? The effective interest rate is that rate of interest actually earned on an investment or loan over the course of a year, incorporating the effects of compounding.

Financial Analysis 40

Financial Analysis 40

Accounting Tools

JUNE 12, 2023

Related Courses Corporate Finance Treasurer's Guidebook The implied interest rate is the difference between the spot rate and the forward rate or futures rate on a transaction. When the spot rate is lower than the forward or futures rate, this implies that interest rates will increase in the future.

Corporate Finance 40

Corporate Finance Accounting Accounting 40

Accounting Tools

SEPTEMBER 2, 2023

Related Courses Small Business Tax Guide What is Imputed Interest Expense? The imputed interest rate is the interest rate that is assumed to have been paid for tax purposes, irrespective of the actual rate paid. This rate is used to maximize the taxable income reported to the Internal Revenue Service (IRS).

Tax 40

Tax Accounting Accounting 40

Accounting Tools

SEPTEMBER 25, 2023

Related Courses Financial Analysis Treasurer's Guidebook What is Compound Interest? Compound interest is interest that is calculated based on both the outstanding principal and any interest that accumulated in prior periods. This is because interest is being compounded on top of existing interest.

Financial Analysis 40

Financial Analysis 40

Accounting Tools

MAY 21, 2023

Related Courses Corporate Cash Management Investing Guidebook Treasurer's Guidebook An investor would buy a bond at a premium price when the bond’s stated interest rate is higher than the market interest rate. Since the stated and market interest rates are identical, ABC can sell the bonds at the full $1,000 price.

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Accounting Tools

SEPTEMBER 25, 2023

The issuer will usually only redeem a bond when interest rates fall, so that it can issue replacement bonds at a lower interest rate, thereby reducing its interest expense. Related Articles Deferred Interest Bond Discount Bond Floorless Bond Serial Bond Types of Bonds

Corporate Finance 40

Corporate Finance 40

Accounting Tools

AUGUST 27, 2023

It is commonly sold at a discount from face value , with the discount (and therefore the interest rate ) being higher if the term is longer. A company can sell its commercial paper directly to investors, such as money market funds, or through a dealer in exchange for a small commission.

Corporate Finance 40

Corporate Finance Deposits Billing 40

Accounting Tools

JUNE 14, 2023

Related Courses Corporate Finance Treasurer's Guidebook What is an Imputed Interest Rate? An imputed interest rate is an estimated interest rate used instead of the established interest rate associated with a debt.

Corporate Finance 40

Corporate Finance 40

Accounting Tools

SEPTEMBER 4, 2023

Related Courses Accounting for Derivatives and Hedges Corporate Cash Management What are Interest Rate Futures? An interest rate futures contract is a futures contract, based on an underlying financial instrument that pays interest. It is used to hedge against adverse changes in interest rates.

Accounting 40

Accounting Accounting 40

Accounting Tools

OCTOBER 26, 2023

A discount from the face value of a bond occurs when investors want to earn a higher rate of interest than the rate paid by the bond, so they pay less than the face value of the bond. There is nearly always a discount or premium associated with a bond, since interest rates are continually fluctuating.

Corporate Finance 40

Corporate Finance Accounting Accounting 40

Accounting Tools

DECEMBER 20, 2023

Consequently, the only realistic inducement for an investor to trigger the conversion is when the market price of the common stock is so high that an immediate profit can be realized by selling the shares on the open market.

Corporate Finance 40

Corporate Finance Financial Statements Tax 40

Accounting Tools

SEPTEMBER 30, 2023

Related Courses Accounting for Bonds Accounting for Investments Corporate Finance What is the Effective Interest Method? The effective interest method is a technique for calculating the actual interest rate in a period based on the amount of a financial instrument's book value at the beginning of the accounting period.

Corporate Finance 40

Corporate Finance Computation Accounting Accounting 40

Accounting Tools

AUGUST 7, 2023

The two primary criteria for classification as a cash equivalent are that an asset be readily convertible into a known amount of cash, and that it be so near its maturity date that there is an insignificant risk of changes in value due to changes in interest rates by the time the maturity date arrives.

Petty cash 75

Petty cash Billing Auditing Accounting 75

Accounting Tools

AUGUST 1, 2023

Related Courses Accounting for Bonds Accounting for Investments Corporate Finance What is a Coupon Rate? A coupon rate is the interest percentage stated on the face of a bond or similar instrument. This is the interest rate that a bond issuer pays to a bond holder, usually at intervals of every six months.

Corporate Finance 40

Corporate Finance Accounting Accounting 40

Accounting Tools

AUGUST 31, 2023

The amount of this discount is especially large when the stated interest rate on a note is well below the market rate of interest. Related Articles Notes Payable This difference is gradually amortized over the remaining life of the note, so that the difference is eliminated as of the maturity date.

Accounting 40

Accounting Accounting 40

Accounting Tools

OCTOBER 4, 2023

Present value is the current worth of cash to be received in the future with one or more payments, which has been discounted at a market rate of interest. An essential component of the present value calculation is the interest rate to use for discounting purposes.

Financial Analysis 40

Financial Analysis Accounting Accounting 40

Accounting Tools

JANUARY 30, 2024

A currency swap is a spot transaction on the over-the-counter market that is executed at the same time as a forward transaction, with currencies being exchanged at both the spot date and the forward date. One currency is bought at the spot rate and date, while the transaction is reversed at the forward date and rate.

Corporate Finance 40

Corporate Finance Accounting Accounting 40

Accounting Tools

DECEMBER 22, 2023

When the stated interest rate associated with a bond is lower than the market interest rate on the date when the bond is sold, investors will only agree to purchase the bond at a discount from its face amount. The amount written off is charged to interest expense.

Corporate Finance 40

Corporate Finance Financial Statements Accounting Accounting 40

Accounting Tools

JUNE 20, 2023

A lender may be more willing to grant credit under a recourse loan at a lower interest rate than would be the case with a non-recourse loan, since the lender's risk of repayment is reduced under a non-recourse situation. A lender has more power in a tight credit market, and so is more capable of imposing recourse terms.

Corporate Finance 75

Corporate Finance Tax Accounting Accounting 75

Accounting Tools

MARCH 2, 2024

A well-managed company that occupies a secure market niche should be able to maintain a strongly positive equity spread. However, this means that the business will be more leveraged, and so will have a higher obligation to pay interest to lenders. Increase the rate of turnover, thereby reducing the need to invest in more assets.

Financial Analysis 40

Financial Analysis Financial Statements Accounts Receivable Accounts Receivable 40

Accounting Tools

NOVEMBER 8, 2023

Related Courses Revenue Management Revenue Recognition What is Market-Based Pricing? Market-based pricing is the act of setting prices that are closely aligned with the current market prices of similar products. Related Articles Pricing Strategies Value Based Pricing

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