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
raketka [301]
3 years ago
15

A 10-year bond of a firm in severe financial distress has a coupon rate of 14% and sells for $900. The firm is currently renegot

iating the debt, and it appears that the lenders will allow the firm to reduce coupon payments on the bond to one-half the originally contracted amount. The firm can handle these lower payments. What are the stated and expected yields to maturity of the bonds

Business
1 answer:
umka2103 [35]3 years ago
4 0

Answer:

13.91% and 7.45%

Explanation:

In this question, we use the RATE formula that is shown below:

In the first case,

Given that,  

Present value = $900

Assuming figure - Future value or Face value = $1,000  

PMT = 1,000 × 12% = $120

NPER = 10 years

The formula is shown below:  

= Rate(NPER;PMT;-PV;FV;type)  

The present value come in negative  

So, after solving this, the yield to maturity is 13.91%

In the second case,

Given that,  

Present value = $900

Assuming figure - Future value or Face value = $1,000  

PMT = 1,000 × 12% ÷ 2 = $60

NPER = 10 years

The formula is shown below:  

= Rate(NPER;PMT;-PV;FV;type)  

The present value come in negative  

So, after solving this, the yield to maturity is 7.45%

You might be interested in
Stanley's Bicycles store buys bicycles on average for $600 and sells them on average for $750. He pays a sales commission of 15%
Rudik [331]

Answer:

Stanley's Bicycles contribution margin is $7,500

Explanation:

<u>Stanley's Bicycles Contribution Margin Income Statement for the month of June</u>

Sales ($750 x 200)                                                       $150,000

Less Variable Costs :

Costs of Sales ($600 x 200)                  $120,000

Commissions ( $150,000 x 15 %)            $22,500    ($142,500)

Contribution                                                                     $7,500

Less Fixed Costs

Rent                                                             $1,400

Salaries                                                       $3,000       ($4,400)

Net Income                                                                       $3,100

Conclusion

Contribution Margin is Sales less Variable Costs. Therefore, Stanley's Bicycles contribution margin is $7,500

3 0
3 years ago
Drag each label to the correct location on the image.
muminat

Answer: low invol- Georgina Megan Dina

High invol Laura Charles jonny

Explanation:

5 0
2 years ago
Which of the following sentences about Wikipedia is true?
Yakvenalex [24]
Actually I got mixed up, the answer i meant to write was B.
7 0
3 years ago
Read 2 more answers
The LA Galaxy understands the importance of attracting big name soccer stars like Beckham, Keane and Donovan to the team. For th
Goshia [24]

Answer:

b) inseparability

Explanation:

Inseparability: It refers to that thing that is not separate from each other. It is a combined service. Just like if a product is sold to a customer so along with it the repairing and warranty expenses are free of cost.

In the given example. the players and the gamer are treated as one which means that they are not inseparable.

So, all other options are incorrect except b. option

4 0
3 years ago
Emerging adults are in a high-risk category for _____.
mario62 [17]
For many things identity theft, to be treated as if they don’t know as much etc
8 0
3 years ago
Other questions:
  • What are royalties ?​
    7·1 answer
  • The purchase of U.S. goods and services by foreigners A. requires the purchase of dollar-denominated bonds. B. increases the dem
    8·1 answer
  • Lisa Smith decided to start her CPA practice as a professional​ corporation, Smith​ CPA, PC. The corporation purchased an office
    8·1 answer
  • Sell or Process Further
    6·1 answer
  • George needs money to buy a motor scooter. he borrows $1000 from his favorite aunt who has agreed not to charge him interest. he
    12·1 answer
  • You have some news to share with your manager. You’ve decided to take a new job, and you’re giving your two weeks’ notice. It’s
    12·1 answer
  • Vernon Corporation offered detachable 5-year warrants to buy one share of common stock (par value $5) at $20. The price paid for
    10·1 answer
  • At Tom's Automotive Repair, the mechanics rarely interacted directly with customers. Work orders were processed by the customer
    6·1 answer
  • Why has it become more difficult for teens to find part-time and summer work
    11·2 answers
  • When production is characterized by opportunity costs, the resulting production possibilities frontier will be a straight line.
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!