1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
jok3333 [9.3K]
1 year ago
12

lourdes corporation's 11% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 15 years, are callable 4 year

s from today at $1,050. they sell at a price of $1,190.03, and the yield curve is flat. assume that interest rates are expected to remain at their current level. what is the best estimate of these bonds' remaining life? round your answer to the nearest whole number.
Business
1 answer:
eduard1 year ago
6 0

The remaining life of the bond is 4 years and the YTM is 8.70%

Par value of the bond = $1000

In a bond, the owner of the bond loans money to a business or the government. Up to a certain future date, when they return the principal amount of the loan, the borrower pays recurring interest payments.

The total sum that the bond issuer returns to the bondholder is known as the "principal," and the interest is represented by a series of payments known as the "coupon."

Selling price = $1190.03

Callable price = $1050

N = 15 years

Interest rate = 11%

Semi payment = Interest rate*Par value*Time in years

= 11%*1000*0.5 = $55

Since those bonds are expected to be called in 4 years, the remaining life of the bond is 4 years

Calculating the yield to maturity:

Future value (FV) = 1000

Present value (PV) = -1190.03

N = 15*2 = 30

PMT = $55

Yield to maturity = [Annual Interest + {(FV-Price)/Maturity}] / [(FV+Price)/2]

= {0.11 + {1000 - 1190.03}/1050}/{(1000 + 1190.03)/2}

So, Yield to maturity = 8.70%

Learn more about bonds:

brainly.com/question/23266047

#SPJ4

You might be interested in
Compared with a career , a job ?
Margaret [11]
A job is just a short term thing to get cash and build up experience . a career is a long term pursuit of lifelong ambition . a career you enjoy the rest of your life
5 0
3 years ago
Read 2 more answers
The process of joint decision making in which employees share a high degree of decision-making power with their superiors is cal
iVinArrow [24]

Answer:

The process of joint decision making in which employees share a high degree of decision-making power with their superiors is called Participative Management

5 0
2 years ago
True or false: No gain or loss is reported when treasury stock is reissued because GAAP does not consider transactions between a
trapecia [35]

Answer:

true

Explanation:

GAAP does not allow gains or losses to be reported when a corporation reissues its treasury stock.

3 0
2 years ago
Kleen Company acquired patent rights on January 10 of Year 1 for $400,000. The patent has a useful life equal to its legal life
inessss [21]

Answer:

a. Particulars                                  Amount  

Patent cost                                     $400,000  

Less: Amortization for 3 years      <u>$150,000 </u> ($400,000*3/8)

Book value at the end of year 3  $250,000

Addition during Year 4                  <u>$20,000  </u>

Total book value                            <u>$270,000</u>

Patent amortization expense for the Year 4 = Total book value / Remaining life

Patent amortization expense for the Year 4 = $270,000 / 5

Patent amortization expense for the Year 4 = $54,000

b.                       Adjusting Entry

Date  Account titles                   Debit       Credit

         Amortization expense    $54,000

                Patents                                       $54,000

6 0
2 years ago
The following is a partial trial balance for the Green Star Corporation as of December 31, 2021:
Vinil7 [7]

Answer and Explanation:

The presentation of the income statement is presented below:

Income statement

Revenues and gains:  

Sales revenue          1,400,000

Add: Interest revenue       35,000

Add: Gain on sale of investment    55,000

Total revenues and gains      1,490,000

Less:

Expenses and losses:  

Cost of goods sold    740,000  

General and administrative expenses 80,000  

Selling expenses   185,000  

Interest expense    45,000  

Total expenses and losses     1,050,000

Income before income tax       440,000

Income tax expense     - 135,000

Net income    305,000

EPS = Net income ÷ Number of common shares

                  ($305,000 ÷ 100,000)  3.05

2.

Income statement

Sales            1,400,000

Less: Cost of goods sold - $740,000

Gross profit      660,000

Less:

Operating expenses:  

General and administrative expenses $80,000  

Selling expenses $185,000  

Total operating expenses  -$265,000

Operating income $395,000

Other incomes and expenses  

Interest revenue  $35,000  

Gain on sale of investment $55,000  

Interest expense  -$45,000  

Total other income, net  $45,000

Less: Income before income tax $440,000

Income tax expense -$135,000

Net income $305,000

EPS = Net income ÷ Number of common shares

(305,000 ÷ 100,000)  3.05

7 0
2 years ago
Other questions:
  • Traditional advertisements for cookware have always focused on appealing to women consumers. such advertisements make use of con
    12·1 answer
  • You're reviewing the paid and organic search report for a client who runs a maui snorkelling tour business, and you see that her
    7·1 answer
  • Best birdies produces ornate birdcages. the company's average cost per unit is $18.00 when it produces 2,200 birdcages. if $5,50
    6·1 answer
  • All parties in the chain of​ _____ of a defective product are​ _____ liable for the injuries caused by that product.
    8·1 answer
  • Martin Enterprises needs someone to supply it with 118,000 cartons of machine screws per year to support its manufacturing needs
    12·1 answer
  • Messing Company has an agreement with a third-party credit card company, which calls for cash to be received immediately upon de
    10·1 answer
  • DG Loans, a mortgage lender, was charged with a discrimination lawsuit. It alleged that the company was offering loans at higher
    11·1 answer
  • 2. Efficiency and effectiveness (Connect, Perform) Read the scenario and then complete the sentence with the correct term. Manag
    15·1 answer
  • What important role does management play in organizations?
    8·1 answer
  • Lawrence Wright is slow in math. He has before him the equation of (ending value minus beginning value) and income return totall
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!