If your credit reports show different scores, what should you do?

Your client has been offered a 5-year, $1,000 par value bond with a 10 percent coupon. Interest on this bond is paid quarterly.

Serjik [45]

Answer:

$906.18

Explanation:

Step 1: Calculation of the present value of the coupon (PVC) cash flow

The formula for calculating the PV of an ordinary annuity is used as follows:

PVC = P × [{1 - [1 ÷ (1+r)]^n} ÷ r] …………………………………. (1)

Where;

PVC = Present value of the coupon (PVC) payment =?

P = Quarterly coupon amount = $1,000 × (10%/4) = $25

r = interest rate = 12% annual = 12% ÷ 4 quarterly = 3% or 0.03 quarterly

n = number of period = 5 years = 7 × 4 quarters = 28 quarters

Substitute the values into equation (1) to have:

PVC = 25 × [{1 - [1 ÷ (1+0.03)]^28} ÷ 0.03] = $469.10

Step 2: Calculation of the present value of the face value (PVFAV) of the bond

The simple PV formula is used as follows:

PVFAV = FAV ÷ (1 + r)^n ……………………………………. (2)

Where;

PVFAC = Present value of the face value of the bond = ?

FAC = Face value of the bond = $1,000

r and n are as already given in step 1 above

Substituting these values into equation (2), we have:

PVFAV = FAV ÷ (1 + 0.03)^28 = $437.08

Step 3: Calculation of the market price of the bond

Market price of the bond = PVC + PVFAC …………………………… (3)

From step 1, PVC is $469.10, and PVFAC is $437.08 from Step 2. We can them substitute for them in equation (3) and have:

Market price of the bond = $469.10 + $437.08 = $906.18

Conclusion

Therefore, she should pay $906.18 for the bond.

5 0

4 years ago

Mr. Brown Wants to open a coffee shop. He has to decide whether he needs to apply for a loan or borrow money from financiers. Al

aliya0001 [1]

Answer:

Planning

Explanation:

Planning involves thinking ahead of time and making necessary preparations. As a management function, planning entails setting an organization's objectives and determining the path to follow to achieve them. Planning involves making logical preparations for moving an organization from where it is to where it wants to be.

Mr. Brown is planning how to establish his business. He is thinking of the measures he needs to put in place before the actual opening. Mr. Brown wants to have his financing and employee information sorted out well ahead of time.

6 0

3 years ago

If a business closes its accounts only at year-end

Levart [38]

Answer:

The correct answer is letter "D": Revenue and expense accounts reflect year-to-date amounts throughout the year.

Explanation:

Most firms close their accounts by the end of the year because of accounting reporting purposes. It does not imply throughout the year the firm will not be able to make reports of their performance. They actually can but closing the account relevant for the report requested. By closing the accounts only by the end of the year, the revenue and expense accounts will show annual calculations in the upcoming period books.

3 0

3 years ago

a portfolio business that generates operating cash flows over and above internal requirements, thereby providing financial resou

aleksley [76]

A cash cow is a portfolio business that generates operating cash flows over and above internal requirements, thereby providing financial resources that may be used to finance new acquisitions, fund share buyback programs, or pay dividends.

What is portfolio?
A portfolio is a group of financial investments such as stocks, bonds, commodity markets, cash, and cash equivalents, which may include closed-end funds and exchange traded funds (ETFs). People commonly believe that stocks, securities, and cash form the foundation of a portfolio. While this is frequently the case, it does not have to be the rule. A portfolio may include a diverse range of assets, such as real estate, art, and investments.

You can hold and manage your portfolio a do, or you can have it managed by a money manager, money manager, or another finance professional.

Therefore, the correct option is (B) cash cow
To learn more about portfolio
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7 0

1 year ago

Sarah, a human resources professional, meets with her supervisor to discuss her career plans. applying the shrm competency model

diamong [38]

The answer is "Behaving consistently with the organization's culture and encouraging people to collaborate."

A competency model is a system for characterizing the expertise and information prerequisites of a job. It is a gathering of competencies that together characterize fruitful employment execution.

Competency models are broadly utilized in business for characterizing and surveying capabilities inside associations in both hard and delicate aptitudes. They speak to a key part of enrollment and employing, and additionally ability and execution administration exercises of HR divisions.

3 0

3 years ago