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gavmur [86]
2 years ago
7

Leigh Delight Candy, Inc. is choosing between two bonds in which to invest their cash. One is being offered from Hershey's and w

ill mature in 10 years and pay $30 each quarter. The other alternative is a Mars' bond that will mature in 20 years and pay $30 each quarter. What would be the present value of each bond if the discount rate is 10% compounded quarterly, and each bond pays $1,000 at maturity?
Business
1 answer:
Firlakuza [10]2 years ago
5 0

Answer:

Hersey's bond = $1125.513

Mars bond = $1172.259

Explanation:

Hersey bond;

Period(t) = 10years = 40(quartely)

Coupon (C) = $30

Rate (r) = 0.1 = 0.025(quarterly)

Pay at maturity(p) = $1000

Using the both present value (PV) and compound interest formula ;

PV =[ C × (1 - (1+r)^-t) ÷ r] + [p ÷ (1 + r)^t]

PV = [30×(1-(1.025)^-40)÷0.025] + [1000÷(1.025)^40]

PV =( 753.083251562) + (372.4306236)

PV = $1125.513

Mars bond;

Period(t) = 20years = 80(quartely)

Coupon (C) = $30

Rate (r) = 0.1 = 0.025(quarterly)

Pay at maturity(p) = $1000

PV =[ C × (1 - (1+r)^-t) ÷ r] + [p ÷ (1 + r)^t]

PV = [30×(1-(1.025)^-80)÷0.025] + [1000÷(1.025)^80]

PV =(1033.55451663) + (138.704569467)

PV = $1172.259

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marusya05 [52]

Answer:

The percentage change in quantity demanded is exactly equal to the percentage change in price. The percentage change in quantity demanded is exactly equal to the percentage change in price.

8 0
2 years ago
Prices for many goods are higher in the city of Shenzhen on the mainland of China than in the city of Hong Kong. An article in t
Marysya12 [62]

Answer:

A) buy the product in Hong Kong and sell it in Shenzhen so eventually the price in Shenzhen will decrease and the price in Hong Kong will increase

Explanation: when the price of the product in Shenzhen reduces due to the low priced product being sold in same place the high priced is sold, this would even out the demands and the price of that in Shenzhen would be dragged down to be able to compete with that of the low priced.

5 0
2 years ago
It takes Juan 1 hour to wash a car and 2 hours to wax it. Maria, on the other hand, takes 1 hour to wash a car and half an hour
Anastasy [175]

Answer: Juan; Lower

Explanation:

One can do the work in which it has a comparative advantage. If one person has the lower opportunity cost of doing some work than the other person then he would specialize in that activity.

Here,

Juan opportunity cost of washing a car = \frac{1}{2}

                                                                            = 0.5 car waxed

This means that the opportunity cost of washing a car is being able to wax 0.5 car.

Maria opportunity cost of washing a car = \frac{1}{0.5}

                                                                            = 2 cars waxed

This means that the opportunity cost of washing a car is being able to wax 2 cars.

Therefore, the opportunity cost of washing a car is lower for Juan. So, Juan would specialize in washing.

4 0
3 years ago
A manman is selected by a marketing company to participate in a paid focus group. the company says that the manman was selected
vodomira [7]

The answer is <u>"random sampling".</u>


In random sampling, every individual from the population has an equivalent shot of being chosen as subject. The whole procedure of examining is done in a solitary advance with each subject chose freely of alternate individuals from the population.  

There are numerous strategies to continue with basic random sampling. The most crude and mechanical would be the lottery strategy. A standout among the best things about simple random sampling is the simplicity of collecting the example. It is likewise considered as a reasonable method for choosing an example from a given populace since each part is given equivalent chances of being chosen.

7 0
3 years ago
Suppose you are a manager of a factory. You purchase five (5) new machines at one million dollars each. If you can resell two of
Dmitriy789 [7]

Answer:

The sunk costs of purchasing the machines is $3,400,000

Explanation:

The concept of sunk costs refer to costs that have been incurred by the entity which are not recoverable.

From the definition, it is clear since the machines have second-hand values,the portion of the costs not covered by the second-hand value is the sunk cost

Hence sunk costs could be derived by the formula below:

Sunk costs=Initial acquisition cost-Second-hand value

Initial acquisition costs=5*$1000000

Initial costs of acquisition =$5000000

Second-hand value=($500000*2)+($200000*3)

Second-hand value=$1600000

Sunk costs=$5000000-$1600000

Sunk costs=$3400000

4 0
3 years ago
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