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irakobra [83]
3 years ago
14

What two possible reasons could cause the required return to differ from the coupon interest​ rate? ​(Select the best answer​ be

low.) A. Cost of funds has changed. B. ​Firm's risk has changed. C. Tax rate has changed. D. Bond contract has changed.
Business
1 answer:
mixas84 [53]3 years ago
5 0

Answer:

A. Cost of funds has changed

B. Firm's risk has changed

Explanation:

The required rate of return on bonds refers to an investor's expected rate of return which is based upon rate of return other investors earn in the market on similarly priced bonds. This is also referred to as yield to maturity i.e YTM.

Coupon rate of payment of bond is the interest payment on such bonds which is usually fixed at the time of issue of such bonds.

Required rate of return may differ on account of change in cost of funds to the issuer which is cost of debt denoted as K_{d} . Cost of debt is determined by tax rate and net proceeds from the issue of such bonds.

Required rate of return may also change on account of change in the firm's risk. If the firm assumes more risk, such risk would deter investors from investing in such bonds and in such scenario, the firm has to offer higher coupon rate than the rate prevailing in the market to attract the investors.

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Justice Enterprises is evaluating the purchase of a new computer net system would cost $24,000 and have a useful life of Syears.
Sergeeva-Olga [200]

Answer:

closest to: B) $7777

Explanation:

NPV ( net presetn value) cashflow - investment

<u>cost savings present value (ordinary annuity):</u>

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

C   $8,500

time         5 years

rate  0.12

8500 \times \frac{1-(1+0.12)^{-5} }{0.12} = PV\\  

PV $30,640.5977  

salvage value present value:

\frac{salvage}{(1 + rate)^{time} } = PV  

Salvage  $2,000  

time   5

rate  0.12

\frac{2000}{(1 + 0.12)^{5} } = PV  

PV   1,134.85  

NPV: 30,640.60 + 1,134.85  - 24,000 = 7,775.45

4 0
3 years ago
The __________ perspective of management, which emerged from the Industrial Revolution, focuses on improving the efficiency, pro
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Answer:

classical or scientific

Explanation:

Classical or scientific management was developed by Frederick Taylor, Max Weber and Henri Fayol. It focused on material needs. Companies needed to improve profits by improving productivity and efficiency, while workers were supposed to be only motivated by the salary that they could earn. This theory has a lot of flaws, but you must remember that it was developed more than 100 years ago.

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Explanation:

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\text { Flotation cost, } \mathrm{F}=8 \% \text { of current price }=\$ 50 * 8 \%=\$ 4 \\&#10;\text { Growth rate,g }=4 % \\&#10;\text { Cost of new common stock, } \mathrm{Ke}=[\mathrm{D} 1 /(\mathrm{P} 0-\mathrm{F})]+\mathrm{g} \\  =[\$ 4 /(\$ 50-\$ 4)]+4 \% \\&#10;=0.086956522+0.04 \\&#10;=0.126956522=12.7 \% \text {(Rounded) }

12.7%

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Companies should avoid answering complaints on product review sites, because they may appear incompetent.
blondinia [14]
False answering customer feedback can make the business seem more honest and appealing to consumers.
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When a light is turned on, the power grid delivers exactly what is needed, instantly. It is impossible for computers and network
Vesnalui [34]

Answer:FALSE

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