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vfiekz [6]
3 years ago
10

When the interest rate in the economy was 10 percent, the price of a bond with no expiration date that paid a fixed annual inter

est of $500 was $5,000. If the interest rate in the economy falls to 6 percent, the price of this bond will be about
a. $4,700.
b. $5,030.
c. $7128
d. $8,333.
Business
1 answer:
Nina [5.8K]3 years ago
7 0

Answer:

Option D $8333

Explanation:

The value of the irredeemable bond can calculated using the Dividend Valuation Model.

The formula for the computation is:

Value of the Bond = Interest paid / rate of return on a similar bond

Value of the Bond = $500 / 6% = $8333.33

Note that initially the bond was worth $5000 which can be calculated with the same formula:

Value of the Bond = $500 / 10% = $5000

The net increase is $3333

So the correct answer is option D.

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7 0
3 years ago
The Titan retires a $24.6 million bond issue when the carrying value of the bonds is $21.4 million, but the market value of the
nataly862011 [7]

Answer:

A debit of $7.6 million to a loss account

Explanation:

Step 1. Given information.

  • Carrying value is 21.4 million
  • Market value when retired is 29 million.

Step 2. Formulas needed to solve the exercise.

Gain(Loss) = Carrying value - Market value when retired

Step 3. Calculation.

= 21.4 million - 29 million

= 7.6  million

Step 4. Solution.

A debit of $7.6 million to a loss account

6 0
3 years ago
The Pioneer Company has provided the following account balances: Cash $38,000; Short-term investments $4,000; Accounts receivabl
mart [117]

Answer:

$48000

Explanation:

Given: Accounts payable $30,000;

         Accrued liabilities payable $4,000;

         Short-term notes payable $14,000.

Current Liability: It is a financial obligation of the company that need to be paid in a short period of time, within one year or within normal operating cycle.

Now, computing current liabilities from the given information.

Current liability= Account\ payable+ Accrued\ liabilities\ payable+ Short-term\ notes\ payable

⇒ Current liability=  \$ 30000+\$4000+\$ 14000

∴ Current liability=  $48000

Hence, Pioneer's total current liabilities is $48000.

6 0
3 years ago
The concept of demand is best described as the quantity of a good or a service that people will offer for sale at different poss
Igoryamba

Answer:

the quantity of a good or a service that people are willing and able to purchase at different possible prices.

Explanation:

The demand concept would be refer to the various quantity amount in which the people are willing and able to buy at various prices so the demand concept deals with the goods or service quantity in which the purchaser would purchase at various prices that can be possible

Hence, the above represent the answer

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3 years ago
How old do you have to be to become a emergency doctor and a paramedic?
lbvjy [14]

Answer:30

Explanation:

5 0
3 years ago
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