On January 1, 2016, Standard Incorporated Is Going to Issue

question 57

Essay

On January 1, 2016, Standard Incorporated is going to issue long-term debt in order to obtain money required to finance the purchase of equipment. It will have to pay a market rate of interest of 10% on this borrowed money. Standard is considering two different financial instruments in order to obtain $10,494. The first instrument being considered is a 3-year, 12%, $10,000 note with interest payable every December 31 over the life of the note. Alternatively, a 3-year, non-interest-bearing note with maturity value of $13,657 will be issued. Show how Standard's January 1, 2016 balance sheet and 2016 income statement will differ if Standard chooses to issue the non-interest-bearing note instead of the 10% note.

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Definitions:

Sensation Seeking

A personality trait defined by the search for experiences and feelings that are varied, novel, complex, and intense, and by the readiness to take physical, social, legal, and financial risks for the sake of such experiences.

Genetic Expression

The process by which information from a gene is used to direct the synthesis of proteins or to produce a functional gene product, influencing an organism's characteristics.

Social Environment

The immediate physical and social setting in which people live or in which something happens or develops. It includes the culture that the individual was educated or lives in, and the people and institutions with whom they interact.

Shared Family Environments

The aspects of the family's emotional, physical, and social milieu that are experienced commonly by its members.