Answer:
Price at issuance is $1,000 for both bonds.
Price of the 5 year bond after the market rate increased to 7.4% is:
PV of face value = $1,000 / (1 + 3.7%)⁸ = $747.77
PV of coupon payments = $27.50 x 6.81694 (PV annuity factor, 3.7%, 8 periods) = $187.47
Market price = $935.24
this bond's price decreased by 64.76/1,000 = 0.06476 = 6.48%
Price of the 10 year bond after the market rate increased to 7.4% is:
PV of face value = $1,000 / (1 + 3.7%)¹⁸ = $519.97
PV of coupon payments = $27.50 x 12.97365 (PV annuity factor, 3.7%, 18 periods) = $356.78
Market price = $876.75
this bond's price decreased by 123.25/1,000 = 0.12325 = 12.33%
Answer: Economic Surplus : $12
Explanation: Economic surplus is the difference between benefit and cost.
In this case, since he is working as a math tutor, he will get $45, there is no other cost. But if he goes for a movie, he will have to spend $12 on movie, which is the cost he needs to bear. The economic surplus is $12 which is not spent on the movie and worked as a math tutor.
Answer:
$4,424
Explanation:
Calculation for her employer's after-tax cost of providing the health insurance
Using this formula
After-tax cost =Annually employer's cost of health insurance -(=Annually employer's cost of health insurance*Marginal tax rate)
Let plug in the formula
After-tax cost =$5,600- ($5,600 × 21%)
After-tax cost =$5,600- $1,176
After-tax cost =$4,424
Therefore her employer's after-tax cost of providing the health insurance is $4,424
The answer is b I’m pretty sure