When the demand for bikes has considerably increased with a rise in price by $10, then the profit also increases by $10 on every bike sold.
<h3>What is meant by profit?</h3>
Profit is an incentive earned by a company by selling its products at a price higher than the original cost.
From the provided situation, it has been analyzed that there is a direct relationship between price and demand, which means an increase in demand leads to a rise in prices also. This will ultimately raise the profits of a company in respect of goods sold.
Therefore, the profits are also raised by $10 in a similar way as the rise in price by $10 due to an increase in demand for bikes.
Learn more about the economic profit in the related link:
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Answer:
Current price of bond is $1060.47
Explanation:
Coupon payment = 1000 x 8% = $80 yearly = 80/2 = $40 semiannually
Number of periods = n = 8 years x 2 periods per year = 16
Yield to maturity = 7% yearly = 7% / 2 = 3.5%
Price of bond is the present value of future cash flows, to calculate Price of the bond use following formula:
Price of the Bond = C x [ ( 1 - ( 1 + r )^-n ) / r ] + [ F / ( 1 + r )^n ]
Price of the Bond =$80 x [ ( 1 - ( 1 + 3.5% )^-16 ) / 3.5% ] + [ $1,000 / ( 1 + 3.5% )^16 ]
Price of the Bond = $80 x [ ( 1 - ( 1.035 )^-16 ) / 0.035 ] + [ $1,000 / ( 1.035 )^16 ]
Price of the Bond = $483.76 + $576.71
Price of the Bond = $1,060.47
Answer:
$319,460
Explanation:
Calculation for the firm’s operating cash flow
First step is to calculate EBIT and Taxes
Sales $1,140,000
Less Cost of goods sold 533,000
Less Selling costs 223,000
Less Depreciation 138,000
EBIT $246,000
Interest 61,600
(7%*$880,000)
Taxable income $184,400
(246,000-61,600)
TAXES 64,540
(35%*$184,400)
Now let calculate the firm’s operating cash flow using this formula
Operating cash flow = EBIT + Depreciation - Taxes
Let plug in the formula
Operating cash flow = $246,000 + $138,000 - $64,540
Operating cash flow = $319,460
Therefore the firm’s operating cash flow is $319,460
Answer:
The annual coupon interest rate is 4%.
Explanation:
Bond Price = C *[1 - [1/(1 + i)^n]]/i + M/(1 + i)n
Bond Price = $768
n = number of periods
= 5*2
= 10 periods
C = ?
i = interest rate
= 0.05
M = Face value
= $1,000
768 = C*[1 - {1/(1 + 0.05)^10/0.05 +$ 1,000/(1 + 0.05)^10
768 = C*[1 - (1/1.05)^10/0.05 + $1,000/(1.05)^10
768 - 613.91 = 7.72173C
C = 154.08675 /7.7213
= 19.95494
Annual = 19.95*2
= $40
Coupon rate = 40/$1,000
= 4%
Therefore, The annual coupon interest rate is 4%.
