Jasper intends to sell certain real estate and facilities held by the Assembly Division at an after-tax profit of $935,000. The proceeds of this sale will be used to retire outstanding debt (described in c).
1. Determine the cost and tax basis of the land:
2. Determine the market value of the real estate:
3. Determine the authorization responsibility for use of the proceeds:
4. Determine the after-tax profit and proceeds:
(c)Jasper will call and retire all outstanding 6% subordinated debentures (callable at 104). Given the present interest rate of 5% on similar debt, it is expected that the debentures will require the full call premium. A rise in market interest rates to 6% would reduce the loss on bond retirement from the projected $75,000 to $65,000.
1. Determine what amount is adequate for bond repurchase: Include the amount
2. Determine the authorization responsibility for the retirement:
3. Determine the most probable cost of repurchasing the bonds: Include the amount
Thank you.
