On May 1, Pierce Company purchased $60,000 of Stanton Company’s 12% bonds at 100 plus accrued interest of $2,400. On June 30, Pi
1 answer:
Answer:
Total proceeds = 52000
Explanation:
given data
purchased = $60,000
rate = 12 % = 0.12
sold = $50,000
accrued interest = $2,400
solution
we get here Total proceeds that will be express as
Total proceeds = [ sold × accrued interest ] + [ sold × rate × 1 ] ................1
put here value in equation 1 and we will get
Total proceeds = [ 50000 × 1.03 ] + [ 50000 × × 1 ]
Total proceeds = 51500 + 500
Total proceeds = 52000
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Answer:
return of the asset = 13.94%
return of the asset = 13.11%
return of the asset = 11.46 %
Explanation:
given data
average return = 14.60 percent
geometric average return = 10.64 percent
observation period = 25 years
solution
we get here return of the asset over year by Blume formula that is
return of the asset = ( T- 1 ) ÷ ( N - 1) × geometric average + ( N -T) ÷ ( N - 1) × arithmetic average ..................1
here N is observation period and T is time
put value in equation 1
return of the asset =
return of the asset = 0.1394 = 13.94%
and
return of the assets =
return of the asset = 0.13115 = 13.11%
and
return of the assets =
return of the asset = 0.11465 = 11.46 %