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Leviafan [203]
3 years ago
15

1. The beta for Eastman Kodak is 1.10. The current six-month treasury bill rate is 3.25%. Estimate the cost of equity for Eastma

n Kodak if the market risk premium is 8.41%, based upon(a) using the treasury bill rate as your risk-free rate.2. What is the price of the following bond? face value: $1,000 maturity: 10 years coupon rate: 8% discount rate: 9%round to decimals3.What is the price of the following semi-annual bond? face value: $1,000 maturity: 10 years coupon rate: 8% discount rate: 9%

Business
1 answer:
Afina-wow [57]3 years ago
7 0

Answer:

1) Cost of equity is 12.501%

2) Price of bond is $935.82

3) Price of semi-annual bond is $934.96

Explanation:

1) Given:

Beta = 1.1

Risk free rate (Rf) = 3.25%

Market risk premium (Rp) = 8.41%

Using CAPM to compute cost of equity:

Re = Rf + β (Rp)

    = 3.25 + 1.1(8.41)

    = 12.501%

2) Price of bond is present value of bond.

Face value (FV) = $1,000

Maturity (nper) = 10 years

Coupon rate = 8%

Coupon payment (PMT) = 0.08× 1000 = $80

Discount rate (rate) = 9% or 0.09

Using spreadsheet function =PV(rate,nper,pmt,FV)

Price of bond is $935.82. It is negative as it's cash outflow

3) Price of semi-annual bond is present value of bond.

Face value (FV) = $1,000

Maturity (nper) = 10×2 = 20 periods

Coupon rate = 8% ÷ 2 = 4%

Coupon payment (PMT) = 0.04× 1000 = $40

Discount rate (rate) = 9% ÷ 2 = 4.5% or 0.045

Using spreadsheet function =PV(rate,nper,pmt,FV)

Price of semi-annual bond is $934.96

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Answer:

$603.65

Explanation:

The correct and accurate cash balance need to be calculated. This is done by preparing a Bank Reconciliation Statement.

Bank Reconciliation Statement.

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therefore,

the adjusted ledger balance of cash as of August 31 is $603.65

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3 years ago
Geraldo is a vice president at Magnolis Inc. He, along with a few other individuals in his rank, is responsible for setting the
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In the above case, Geraldo is the vice president of the company and also he is responsible for determining the directions of operations of the company thus we can consider him in the top management.

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A firm has actual sales in November of $1,000 and projected sales in December and January of $3,000 and $4,000, respectively. Th
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(B) $2,100

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1. Buyer's right to reject: In this case the buyer has the right to reject the goods on inspection, and notify the seller within a reasonable amount of time.

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Answer:

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