Answer:
The bonds should sell for $363.4 in the market today.
Explanation:
Explanation:
The price of a bond is equivalent to the present value of all the cash flows that are likely to accrue to an investor once the bond is bought. These cash-flows are the periodic coupon payments that are to be paid annually from year 6 to year 10 and the par value of the bond that will be paid at the end of 10 years plus the 5 years deferred interest at the end of year 10.
From year 6 to year 10, there are 5 equal periodic coupon payments that will be made. Given a par value equal to $1,000, in each year, the total coupon paid will be =$100. This stream of cash-flows is an ordinary annuity.
In summary the expected cashflows can be listed as follws:
year 1-5: $0 per annum
year6-10: $100 per annum coupon payments
Year 10:Par value+deferred interest for the 1st 5 years =1,000+5*$100=$1,500
The required rate of return is to 0.2% per annum
The PV of the cash-flows = PV of the coupon payments + PV of the par value plus deffred interest
=100*PV Annuity Factor for 5 periods at 20%*PV Interest factor with i=20% and n =5
+ $1,500* PV Interest factor with i=20% and n =10
Answer:
$19,215.65
Explanation:
To the determine the amount to be invested, we have to find the present value of $22,000 at 7%
P= FV ( 1 + r) ^-n
FV = Future value = $22,000
P = Present value
R = interest rate = 7%
N = number of years = 2
$22,000(1.07)^-2 = $19,215.65
I hope my answer helps you
Answer:
Calendar belongs to B category
Explanation:
The computation of ABC class that Calendars belong is shown below:-
Items Annual demand Unit cost Total cost Category
Watches 1,020 $65 $66,300 A
Caps 700 $8.5 $5,950 A
Calendars 650 $9 $5,850 B
Scented
candles 700 $5 $3,500 B
Key chain 967 $2.5 $2,417.5 C
Greeting
cards 1,000 $1.5 $1,500 C
Here, for computing the total we simply multiply the annual demand with unit cost of each items. Also we have categorized the A, B and C into values which means A has highest value, B is lower than A and C has the lowest value in compare of A and B.
Therefore, as per the requirement the Calendar belongs to B category.
Answer:
b. C$1.344.
Explanation:
Calculation to determine Which one of the following one-year forward rates best establishes the approximate interest rate parity condition
One-year forward rates =C$1.40 *[1 + (.04 - .08)]^1
One-year forward rates= C$1.344
Therefore the following one-year forward rates that best establishes the approximate interest rate parity condition is C$1.344