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Alchen [17]
4 years ago
7

Market Enterprises would like to issue $1,000 bonds and needs to determine the approximate rate it would need to pay investors.

A firm with similar risk recently issued bonds with the following current features: a 5% coupon rate, 10 years until maturity, and a current price of $1,170.50. At what rate would Market Enterprises expect to issue bonds, assuming annual interest payments? Please round to the closest answer. (Solve this problem using either Excel's "Goal Seek" function, plug into tvm tables, or a financial calculator.)
Business
1 answer:
Black_prince [1.1K]4 years ago
3 0

Answer:

It will use a 3% rate

Explanation:

We need to solve for the discount rate which makes the coupon payment and maturity of the similar bond equal their current market value of 1,170.50

This is done using excel goal seek tool:

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

C 50.00 (1,000 x 5%)

time 10 years

<em>rate 0.030011</em>

50 \times \frac{1-(1+0.030011)^{-10} }{0.030011} = PV\\

PV $426.4860

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

Maturity   1,000.00

time   10.00

<em> rate  0.030011071</em>

\frac{1000}{(1 + 0.030011)^{10} } = PV  

PV   744.01

PV c $426.4860

PV m  $744.0139

Total $1,170.5000

<em>market rate  = 0.030011071 = 3% </em>

The procedure will be to build up the formulas and link the rates to a cell.

and then, click on the total cell and use goal seek changing the rate cell

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Answer:

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Explanation:

Giving the following information:

Joe's starting salary is $80,000 per year. He plans to put 10% of his salary each year into a mutual fund. He expects his salary to increase by 5% per year for the next 30 years, and then retire. If the mutual fund will average 7% annually

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FV= {A*[(1+i)^n-1]}/i

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FV= {8000*[(1.12^30)-1]}/0.12= $1,930,661.48

3 0
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3 0
2 years ago
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pickupchik [31]

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In an efficient economy the surplus of both consumer and supplier are maximum and any increase or decrease in resource allocation will only result in harm of the economy.

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4 years ago
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Romashka [77]
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7 0
3 years ago
A local ice-cream parlor has 100 customers in the "rush" hour between 5PM and 6PM (assume that the customers arrive according to
WITCHER [35]

Answer: 36 seconds.

Explanation:

Based on the information given in the question, the Taktzeit for the ice-cream scoopers will be calculated thus:

First and foremost, Taktzeit refers to the time taken between the beginning of production for one unit and the beginning of the next unit.

From the information given, the available Time is 1 hour which can be converted to secunds and this will be:

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Then, the takzeit will be:

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5 0
3 years ago
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