Answer:
b) The company will incur a loss
Explanation:
The market rate at the time of issue = 9%, while coupon rate = 8%, it says bonds provide lesser return when compared to the market rate.
At end of year 2 market rate drops to 6% which is lower than the Bond's coupon rate. Which means the bond's providing high return when compared to the market. So, company to retire the bonds need to pay more than the par value.
As company should retire these bonds more than par value, the company incur a loss.
Option 'B is correct
The company incur a loss
The amount to be paid on maturity is $100,440
Given that;
Purchase value of 8% corporate bond at 93 = $1,000
Find:
The amount to be paid on maturity
Computation:
Interest amount = Face value of bond × Price × Interest
Interest amount = $1,000 × 93 × 8%
Interest amount = $7,440
The amount to be paid on maturity = $7,440 + $93,000
The amount to be paid on maturity = $100,440
In finance, maturity or maturity date is the final payment due date of a loan or other financial instrument such as a bond or term deposit upon which principal (and remaining interest) is paid.
Maturity is the date on which the life of a trade or financial instrument ends, after which it must be renewed or cease to exist. The life of a bond is the period during which its holder receives interest payments on their investment. When the bond matures, the holder will be refunded the face value. The maturity may change if the bond has a put or call option.
Learn more about Maturity here: brainly.com/question/9099365
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Answer:D
Explanation:I think D because the default on a loan how much do you use loans and why do you use loans a lot do you pay them back and all that.
Answer: C - direct labor and manufacturing overhead.
Explanation: Conversion costs are costs incurred in bringing raw materials to finished products. Its a cost that includes direct labour and manufacturing overheads because they both relate directly to the conversion of the raw materials to finished products.
Answer:
The maximum expected output capability of a resource or system. - Is the definition of <u>Design Capacity.</u>
An approach to a firm's acquisition of resources that will either lead, lag, or track the customer demand. - Is the definition of <u>Capacity Expansion Strategy.</u>
A capacity acquisition strategy where expansion takes place before the demand materializes and never falls behind the capacity growing requirements. - Is the definition of <u>Lead the Demand.</u>
The expected output capability of a resource or system after accounting for scheduled down time (like for maintenance).- Is the definition of <u>Effective Capacity.</u>
A capacity acquisition strategy where expansion takes place only after the demand materializes and never exceeds the demand. - Is the definition of <u>Lag the Demand.</u>
