The value of the bond is $865.80.
<h3>What is a bond?</h3>
A bond is a debt instrument used to raise capital. Bondholders receive periodic interest payment. At the maturity of the bond, the bondholders receive the amount invested.
<h3>What is the value of the bond?</h3>
The value of the bond can be determined by calculating the present value of the bond. The present value is the sum of the discounted cash flows.
Present value = (60 / 1.08) + (60 / 1.08^2) + (60 / 1.08^3) + (60 / 1.08^4) + (60 / 1.08^5) + (60 / 1.08^6) + (60 / 1.08^7) + (60 / 1.08^8) + (60 / 1.08^9) + (60 / 1.08^10) + (1000 / 1.08^10) = $865.80
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Answer:
C. biased, understating the effectiveness of the diet.
Explanation:
As the company promises the population of America which is too huge, just on the study based on 20 employees of the company itself.
This clearly means that the company is trying to sell the product with false reports as the sample size of study is to small to represent entire American Population.
Further that too the employees could be influenced to get the false results.
As since the employees could be influenced and that the results can be altered accordingly, the report is biased, and is misleading.
To calculate:
1) Net income (loss) for 2010.
2) Operating cash flow
Solution: 1)
Sales = $850000
Less: Cost of goods sold = $610000
Gross profit = $240000
Less: Administrative and selling expenses = $110000
Earning before Interest, Tax and Depreciation = $130000
Less: Depreciation = $140000
Earning before Interest and Tax (EBIT) = ($10000)
Less: Interest expense = $85000
Earning before tax (EBT) = ($95000)
Less: Tax = $0 (as company is having negative EBT or loss hence no tax)
Net loss = $95000
2) Operating cash flow
EBIT + Depreciation - Tax
Wherein, EBIT = Earning before Interest and Tax
($10000) + 140000 - 0 = $130000
