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Angelina_Jolie [31]
3 years ago
12

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annua

l coupon payments. Suppose a German company issues a bond with a par value of €1,000, 20 years to maturity, and a coupon rate of 7.8 percent paid annually. what is the current price of the bond?
Business
1 answer:
max2010maxim [7]3 years ago
6 0

Answer:

Market Price $985.01

Explanation:

We have to convert the US semiannually rate to annually.

(1 + 0.078/2)^{2} -1 = 0.079521

Now this is the annual rate spected for a similar US Bonds

So we are going to calculate the present value using this rate.

Present value of an annuity of 78 for 20 years at 7.9521%

C * \frac{1-(1+r)^{-time} }{rate} = PV\\

78 * \frac{1-(1+0.079521)^{-20} }{0.079521} = PV\\

PV = 768.55

And we need to add the present value ofthe 1,000 euros at this rate

\frac{Principal}{(1 + rate)^{time} = Present Value}

\frac{1,000}{(1 + 0.079521)^{20} = Present Value }

Present Value = 216.4602211

Adding those two values together

$985.01

The reasoning behind this is that an american investor will prefer at equal price an US bonds because it compounds interest twice a year over the German Bonds.

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A company has the following loan activity—Additional loan from bank: $19,000; Ending cash
Bingel [31]

Answer:

Preliminary cash balance =  - $13,400.

Explanation:

We know,

Cash at hand = Preliminary cash balance + Additional borrowings from bank.

Given,

Cash at hand = $5,600

Additional borrowings from bank = $19,000

Putting the values into the formula, we can get

Cash at hand = Preliminary cash balance + Additional borrowings from bank

Or, $5,600 = Preliminary cash balance + $19,000

Or, $5,600 - $19,000 = Preliminary cash balance

Or, Preliminary cash balance =  - $13,400.

Therefore, the company had no cash at the beginning; rather, they had to use other people's money.

3 0
3 years ago
Suppose 2 athletes sign 10-year contracts for $80 million. In one case, we're told that the $80 million will be paid in 10 equal
maxonik [38]

Answer:

player 2 is signing a better contract

Explanation:

the present value of an annuity (player 1) = annual payment x annuity factor

assuming that the interest rate is 10%

present value = $10 million x 6.1446 (PV annuity factor, 10%, 10 periods) = $61.446 million

player 2's contract

the present value of a growing annuity = [payment / (i - g)] x {1 - [(1 + g) / (1 + i)]ⁿ} = [$10 / (10% - 5%)] x {1 - [(1 + 5%) / (1 + 10%)]¹⁰} = $200 x 0.372 = $74.398 million

4 0
3 years ago
When the price elasticity of demand for a good is very elastic, quantity demanded is _____ to a change in price and the demand c
meriva

Answer:

1. Responsive

2. Elastic

Explanation:

When the price elasticity of demand for a good is very elastic, quantity demanded is RESPONSIVE to a change in price and the demand curve is relatively ELASTIC.

This is because the price elasticity of demand measures the responsiveness of the quantity demanded to a change in price.

Consequently, as the quantity demanded changes, the demand curve then becomes relatively elastic, by shifting either to the right or left.

3 0
3 years ago
Job 243 was recently completed. The following data have been recorded on its job cost sheet: Direct materials $ 55,870 Direct la
liq [111]

Answer:

 $16.66

Explanation:

Data provided

Direct material = $55,870

Direct labor hour = 475

Wage rate = $11

Machine hour = $556

Number of units = 4,100

Overhead rate = $13

The preparation of job sheet is shown below:-

Direct Material                $55,870

Add: Direct Labor           $5,225

( 475 × $11)

Overhead                         $7,228

($556 × $13)

Total                                  $68,323                      

Number of units                4,100

Cost per unit                      $16.66

($68,323 ÷ 4,100)

8 0
3 years ago
Your friend is starting a company and wants to identify the job their product will do for people. What advice would you give the
ankoles [38]

Answer:

they should make a google doc or slides and inform them with if

8 0
3 years ago
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