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Alexxandr [17]
3 years ago
6

You bought a bond one year ago for $1,070.85. This bond pays a semi-annual coupon at the rate of 8.4% and matures 19 years from

today. What is the percentage change in price from last year until today if interest rate have fallen and a fair yield for this bond is now 7.2%? (a) + 10.34% (b) + 4.89% (c) - 17.16% (d) + 4.66% (e) - 4.66%
Business
1 answer:
krek1111 [17]3 years ago
5 0

Answer:

(b) + 4.89%

Explanation:

Price of bond is the present value of future cash flows. The coupon payment and cash flow at maturity is discounted to calculate the value of the bond.

Assuming the face value of the bond is $1,000

As per given data

Coupon payment = $1,000 x 8.4% = $84 annually = $42 semiannually

Number of periods = n = 19 years x 2 = 38 periods

Yield to maturity = 7.2% annually = 3.6% semiannually

To calculate Price of the bond use following formula

Price of the Bond = C x [ ( 1 - ( 1 + r )^-n ) / r ] + [ F / ( 1 + r )^n ]

Price of the Bond =$42 x [ ( 1 - ( 1 + 3.6% )^-38 ) / 3.6% ] + [ $1,000 / ( 1 + 3.6% )^38 ]

Price of the Bond = $42 x [ ( 1 - ( 1.036 )^-38 ) / 0.036 ] + [ $1,000 / ( 1.036 )^38 ]

Price of the Bond = $862.38 + $260.81

Price of the Bond = $1,123.19

There is an increase in selling price

Change in price = $1,123.19 - $1,070.85 = 52.34

Percentage change = 52.34 / $1,070.85 = 4.89%

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Answer:

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= $7,500.

Explanation:

a) Data and Calculations:

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Total incremental cost                 $2,907,500           $2,900,000

b) The net advantage obtained by Kim for replacing the old equipment with the new equipment is $7,500 ($2,907,500 - $2,900,000).  Note that the purchase price of the old equipment with its accumulated depreciation are not relevant costs.  This case is worked out without taking into account the time value of money.  Assuming that the present value of the cash flows was computed, a different result and conclusion would be reached.

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Answer:

total net income = $109,000

Explanation:

given data

Blake receive = $103,000

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solution

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so here Blake get $3,000 as share of the net income

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The answer is China

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Tensions scaled, and although most world governments condemned the attack, China's Ministry of Foreign Affairs didn't explicitly condemn the bombarding by North Korea and only made a call to peace in the Korean Peninsula. 
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