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neonofarm [45]
3 years ago
6

Compute the price of a 4.8 percent coupon bond with 10 years left to maturity and a market interest rate of 7.4 percent. (Assume

interest payments are semiannual.) (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Business
1 answer:
Lana71 [14]3 years ago
8 0

Answer:

Price of bond=$820.72

Explanation:

Explanation:

<em>The value of the bond is the present value(PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV).</em>

<em>Value of Bond = PV of interest + PV of RV</em>

Let us assume the bond had a per value of 1000 and also redeemable at par

The value of bond for Jasper Inc can be worked out as follows:

Step 1

<em>Calculate the PV of interest payments</em>

Annual interest payment

= 4.8% ×  1000 = 48

PV of interest payment

= 48  × (1-(1.074)^(-10)/0.074)

= 48 ×6.8955

=330.9855967

Step 2

<em>PV of redemption Value</em>

PV = 1000 × (1.074)^(-10)

= 489.73

Step 3

Price of bond

=330.98 +489.73

=$820.72

Price of bond=$820.72

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Answer:

a. $32,800

b. $37,019

c. $37,460

Explanation:

a. The computation of Total Amount Withdrawn by Alan when simple interest is shown below:-

Accumulated amount of money = Invested amount + (Rate of interest × Number of years)

= $20,000 + ($20,000 × 8% × 8)

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b. The computation of Total Amount Withdrawn by Alan when annually Compounded is shown below:-

Accumulated amount of money = Invested amount × (1 + rate of interest)^Number of years

= $20,000 × (1 + 0.08)^8

= $20,000 × 1.85093

= $37,019

c. The computation of Total Amount Withdrawn by Alan when semi annually Compounded is shown below:-

Accumulated amount of money = Invested amount × (1 + rate of interest × Number of years ÷ 200)^16)

= ($20,000 × (1 + 0.08 × 8 ÷ 200)^16)

= $20,000 × 1.87298

= $37,460

Therefore we have applied the above formulas.

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<h3>What is a project?</h3>

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2 years ago
You own a small manufacturing business that produces widgets. You have spent $150,000 acquiring the fixed assets you need to pro
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Answer:

11,538 units

Explanation:

Given that:

Fixed assets = $150,000

Variable cost = $2

Sales price = $15

Break even point = Fixed cost ÷ Contribution margin

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