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Alona [7]
3 years ago
7

Morgan would like to purchase a bond that has a par value of $1,000, pays $80 at the end of each year in coupon payments, and ha

s 10 years remaining until maturity. If the prevailing annualized yield on other bonds with similar characteristics is 6 percent, how much will Morgan pay for the bond
Business
1 answer:
dybincka [34]3 years ago
6 0

Answer:

Price of Bond =  $1,147.201

Explanation:

The value of the bond is the present value(PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV).  

Value of Bond = PV of interest + PV of RV  

The value of bond for Morgan can be worked out as follows:

Step 1  

<em>PV of interest payments  </em>

PV of interest =  

A × (1+r)^(-n)/r

A- interest payment- 80, r-yield on bond- 6%, n-years to maturity- 10

80 × (1- (1.06)^(-10)

= 588.8069

Step 2  

<em>PV of Redemption Value  </em>

= 1,000 × (1.06)^(-10)  

= 558.3947769

Price of bond  

=  588.80 + 558.394

Price of Bond =  $1,147.201

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6 0
2 years ago
Margie has had a tough month.​ First, she had dental work that cost ​$700. ​Next, she had her car transmission​ rebuilt, which c
motikmotik

Answer:

Calculate amount of annual interest:

The simple interest rate is the percentage of the credit that should be paid as interest on yearly basis. The amount of interest should be paid per year on a loan.

Miss. Margie has spent $700 for dental work and $1,400 for car transmission rebuilt. She has made both transactions on her credit card. If she does not pay credit balance of $2100, she will be charged 21 percent interest.

Calculate the annualized interest expenses.  

Miss. Margie should pay annual interest if she does not pay off credit card balance. She has a credit balance of $2100. The interest rate on credit balance is 21 percent.

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Annual Interest = 2,100 x 0.21  

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Annual interest on credit card balance is $441

Money market investment is a high-liquid, and short term securities containing commercial paper. Treasury bill, banker's acceptance, promissory note.

Calculate the amount of interest received on money market investment. Miss. Margin has a money market account with $15.000. On this account she receives 3 percent interest.

So, the total interest earned on a money market account is:

Annual Interest = Amount x Interest rate

Annual Interest = 15,000 x 0.03

Annual Interest = $450

Miss. Margin has got $450 as annual interest on money market account of $15000 with the interest rate of 3 percent.

To calculate the amount of annual interest, she should write a check of 2,100 for pay off credit card balance, a money market account shows the balance of 12,900. The interest rate is 3 percent.

Annual interest = Amount x interest rate

Annual interest = 12,900 x 0.03

Annual interest = $387

If she should write the check out of her money market account she gets interest of $387.

So, she will lose the interest of $63

Miss. Margin should write the check'. She is able to cover credit card bill from money market account. It is always better to payoff credit card bill in full from income or saving than to pay credit card balance with interest on due balance.

If she pays credit card due balance from money market account, she will not have to pay interest charges

8 0
3 years ago
Read 2 more answers
Hale Company sells merchandise on account for $1,000 to Long Company with credit terms of 2/10, n/30. Long Company returns $200
Vladimir79 [104]

Answer:

Amount of Check = $784

so correct option is a. $784

Explanation:

given data

Merchandise on account = $1,000

Long Company returns  = $200

credit terms =  2/10

n/30

to find out

What is the amount of the check

solution

we know here that Total Merchandise will be

Total Merchandise = Merchandise on account  - returns   ....................1

Total Merchandise = $1000 - $200

Total Merchandise = $800

and

discount will be here

Discount = 0.02  ×  800

returns = $16

so

Amount of Check will be as

Amount of Check = Total Merchandise - Discount   ...................2

put here value

Amount of Check = Total Merchandise - Discount  

Amount of Check = $800 - $16

Amount of Check = $784

so correct option is a. $784

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Suppose demand is given by q = 80 - 0.5p. what is the price elasticity of demand when p = 40?
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<span>I believe the answer to this question is: the price elasticity of demand is 60. q = 80 - 0.5(40) is the equation I used. Half of 40 is 20, and 80 minus 20 is 60.</span>
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