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bearhunter [10]

3 years ago

6

How would you value a 1000 bond with 10% coupon rate?

1 answer:

andreev551 [17]3 years ago

3 0

Question

<em>How would you value a 1000 bond with 10% coupon rate?</em>

<em>Assuming the bonds is repayable in five (5) years time with a yield of 11% per annum.</em>

Answer:

Value of bond = $948.54

Explanation:

<em>The value of the bond is the present value(PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV). </em>

Value of Bond = PV of interest + PV of RV

The value of bond of the can be worked out as follows:

Step 1

<em>PV of interest payments </em>

<em> </em>Annul interest payment<em> </em>= 10% × 1000 = 100

Annual yield = 11%

Total period to maturity (in years) = 8 years

PV of interest =

100 × (1- 1.11^(-8)/)/ 0.11 = 514.612

Step 2

<em>PV of Redemption Value</em>

= 1,000 × (1.11)^(-8) = 433.926

Step 3

<em>Price of bond </em>

= 514.612 + 433.926 = 948.539

Value of bond = $948.54

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Answer:

The Oscar's fixed costs per month is $2,500

Explanation:

Fixed cost: The fixed cost is that cost in which the amount is remain fixed whether production level change or not, that means it does not have any effect on the production level.

In the given question,

Monthly rent is $2,500 which is fixed so, it would be considered as fixed cost

The per hour pay and electrical bill depend upon the total hours of operation which means if the more hours, the workers are engaged so more pay will be give to them, and more electricity bill come.

And if they are working few hours, than less rate and less electrical bill will be there which reflects the variable cost. So, these cost are considered variable cost. Thu, it would not be included in the fixed cost.

Hence, Oscar's fixed costs per month is $2,500

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3 years ago

CC’s is analyzing a proposed project with anticipated sales of 3,620 units, give or take 5 percent at a sales price of $24, plus

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Answer:

The total variable cost will be $ 16 * 3620= $ 57920

Explanation:

CC

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<u> Given 1 2 3</u>

Variable Increase ---- 10% 9.125% 9.125%

<u>Fixed Decreased 6.97% </u>

Sales price per unit $24 $24 $24 $24

Variable price per unit $ 14.6 $16.06 $ 16 $ 16

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Sales Volume 3620 3620 3620 3620

We have taken the sale prices constant and changed the variable costs and fixed costs.

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Sensitivity Analysis Report

Given 1 2 3

Sales 86880 86880 86880 86880

Variable Costs 52852 58137.2 57920 57920

Contribution Margin 34028 28742.8 28960 28960

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<u>Operating Profit 21128 15482.8 16060 16960</u>

Dollar Change in

<u>Variable Expenses 5645.2 5068 5068 </u>

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<u>The total variable cost will be $ 16 * 3620= $ 57920</u>

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3 years ago

Nirav just opened a savings account paying 2 percent interest, compounded annually. After four years, the savings account will b

nlexa [21]

Nirav recently opened a savings account offering 2% annual compound interest, this means that Nirav will earn the same amount of interest each year for four years.

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An account at a retail bank is formally called as a savings account. This is a type of account that person granted a person that his money is safe in a particular bank. Refer to the image below for the complete question.

The given case tells about that <u>what would be the impact</u> of savings account offering 2% annual compound interest on Nirav, then he will earn the same amount of interest compounded each year for four years.

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3 0

2 years ago

Which of the following is NOT part of the simple circular flow model?

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Answer:

<u>The correct answer is B. Government</u>

Explanation:

There is no doubt that the simple circular flow model explains supply and demand in an elemental economic perspective, however this model doesn’t take into account at least five other key factors of the economic systems. Those factors are:

1. Government sector.

2. Government spending.

3. The taxation system.

4. The financial institutions.

5. Imports and exports.

<u>The correct answer is B. Government.</u>

4 0

3 years ago

Beale Manufacturing Company has a beta of 1.8, and Foley Industries has a beta of 0.80. The required return on an index fund tha

navik [9.2K]

Answer:

3.5%

Explanation:

We will apply asset pricing model to calculate cost of equity (required rate of return). The capital asset pricing model is stated as below:

Cost of equity = Risk-free rate + Beta x Market risk premium

Putting all the number together, we have:

Cost of equity (Beale) = 5.5% + 1.8 x (9% - 5.5%) = 11.8%

Cost of equity (Foley) = 5.5% + 0.8 x (9% - 5.5%) = 8.3%

Cost of equity (Beale) - Cost of equity (Foley) = 11.8% - 8.3% = 3.5%

<em />

<em>Note: You can also do quick calculation as below:</em>

<em>Cost of equity (Beale) - Cost of equity (Foley) = (Beta of Beale - Bete of Foley) x Market risk premium = (1.8 - 0.8) x (9% - 5.5%) = 3.5%</em>

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3 years ago