A company issues a ten-year bond at par with a coupon rate of 6.5% paid semi-annually. The YTM at the beginning of the third yea
r of the bond (8 years left to maturity) is 8.6%. What is the new price of the bond
1 answer:
Answer:
$880.31
Explanation:
For computing the new price of the bond we need to apply the present value formula i.e to be shown in the attachment
Given that,
Assuming Future value = $1,000
Rate of interest = 8.6% ÷ 2 = 4.3%
NPER = 8 years × 2 =
PMT = $1,000 × 6.5% ÷ 2 = $32.5
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, after applying the above formula, the present value is $880.31
You might be interested in
Answer: See attachment
Explanation:
a. Based on the information in the attachment, the indirect costs that's allocated to the units will be:
Government = 450,000
Corporate = 750,000
The expected revenue that can be generated from the government unit will be:
= 495,000 × (100% + 15%)
= 495,000 × 1.15
= $569250
b. Based on the information given, the indirect costs that's allocated to the units will be:
Government unit = 360,000
Corporate unit = 840,000
The revenue from the government will be:
= 405000 × (100% + 15%)
= 405000 × 115%
= 405000 × 1.15
= $465750
c. If the firm chooses total hours worked as the cost driver, the indirect costs be allocated to the two units as:
Government = 400,000
Corporate unit = 800,000
Revenue from government will be:
= 445000 × 115%
= 445000 × 1.15
= $511750
Check attachment for further explanation.
