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Usimov [2.4K]
3 years ago
9

Vangaurd Health System bonds have an annual coupon rate of 8 percent and a par value of $1,000 and will mature in 20 years. If y

ou require a 7 percent return, what price would you be willing to pay for a Vangaurd bond
Business
1 answer:
Umnica [9.8K]3 years ago
8 0

Answer:

Price willing to pay=$1105.94

Explanation:

Annual Coupon Payment=$1,000*0.08

Annual Coupon Payment=$80

Calculating Present Value (PV) of Par Value:

PV=\frac{FV}{(1+i)^{20}}

Where:

i is the rate of return.

FV is par value

PV=\frac{\$1000}{(1+0.07)^{20}}

PV= $258.419.

Calculating PV of annual Coupon Payment:

PV=A\frac{1-(1+i)^{-20}}{i}

i is the coupon rate

A is the annual Payment

PV=\$80\frac{1-(1+0.07)^{-20}}{0.07}

PV=$847.521

Price willing to pay= Present Value (PV) of Par Value+ PV of annual Coupon Payment

Price willing to pay=$258.419+$847.521

Price willing to pay=$1105.94

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Philippe Organic Farms has total assets of $689,400, long-term debt of $198,375, total equity of $364.182, net fixed assets of $
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Answer:

correct option is  B. 1.40

Explanation:

given data

total assets = $689,400

long-term debt = $198,375

total equity = $364.182

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we get here first current assets that is express as

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put here value

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current assets = $177300

and now we get Current liabilities that is express as

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put here value

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Current liabilities = $126843  

so here Current ratio will be

Current ratio = current assets ÷ Current liabilities  .............4

Current ratio = \frac{177300}{126843}  

Current ratio = 1.40

so correct option is  B. 1.40

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