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3 years ago

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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

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%

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If the price of gasoline rises, when is the price elasticity of demand likely to be the most elastic

QveST [7]

$3.00 probably because if it,s $3.00 it should be very elastic

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3 years ago

What was the ratio of per capita income in each of the following countries to that in the United States in the year 2010:

svet-max [94.6K]

Answer:

For Countries (per capita) United States of America (per capita)

<u> Ethiopia: </u>

$380 $48,468

<u>Mexico: </u>

$9,271 $48,468

<u>India:</u>

$1,358 $48,468

<u>Japan:</u>

$44,508 $48,468

Explanation:

Ratio per Capita also known as Gross Domestic Product per Capita (GDP Capita) is the monetary measure of the market value of all the final goods and services produced in a specific time period within the country in view. <em>It is useful for comparing national economies of different countries on the international market.</em>

3 0

3 years ago

Pei's savings account balance is $12,000 today. Pei opened the account exactly 7 years ago with a $10,000 deposit. Pei has made

koban [17]

Answer:

2.64%

Explanation:

A = P(1 + r)^n

A = $12,000

P = $10,000

n = 7 years

12,000 = 10,000(1 + r)^7

(1 + r)^7 = 12,000/10,000 = 1.2

(1 + r)^7 = 1.2

1 + r = (1.2)^1/7

I + r = 1.0264

r = 1.0264 - 1 = 0.0264

r = 0.0264 × 100 = 2.64%

5 0

3 years ago

Tracy consumes dress shoes (D) and casual Crocs (C). Her marginal utility from consuming casual Crocs is MU Subscript Upper CM

Llana [10]

Answer:

The optimal bundle is 6 pairs of dress shoes and 3 pairs of Crocs.

Explanation:

From the question,

Allowance (M) = $450; Price of dress shoes, Pd = $50; Price of crocs, Pc = $50

Note: MRS-price ratio, MUC- marginal utility from consuming casual Crocs ,MUD- marginal utility from consuming dress shoes

Optimal bundle is determined where MRS = Price ratio

MRS = MUC/MUD = 20DC/10C2 = 2D/C

Price ratio = Pd/Pc = 50/50 = 1

So, 2D/C = 1

Therefore, C = 2D

Budget constraint: M = Pd*D + Pc*C

So, 50D + 50*(2D) = 450

50D + 100D = 150D = 450

So, D = 450/150 = 3

C = 2D = 2*3 = 6

7 0

3 years ago

On January 1, 2021, Farmer Fabrication issued stock options for 100,000 shares to a division manager. The options have an estima

Black_prince [1.1K]

Answer and Explanation:

The journal entries are shown below:

1. The revised estimated amount of total compensation is

= 100,000 shares × $6

= $600,000

2. The action shows that the Farmer Fabrication cumulative effect for the year 2022 earnings

3. The journal entries are shown below:

For the year 2022

Compensation expense

To Paid-in Capital-Stock options $200,000

(Being the compensation expense is recorded) $200,000

For recording this we debited the compensation expense as it increased the expenses and credited the paid in capital as it increased the stockholder equity

The computation is shown below:

= $600,000 ÷ 3 years

= $200,000

7 0

3 years ago