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AlexFokin [52]
3 years ago
7

What would be the value of the bond described in Part d if, just after it had been issued, the expected inflation rate rose by 3

percentage points, causing investors to require a 13% return? Would we now have a discount or a premium bond?
Business
1 answer:
kolbaska11 [484]3 years ago
3 0

Answer:

The value of bond is $837.213, the bond is a discount bond

Explanation:

Solution

Given that

The Rate of return is 13% which is higher than the  coupon rate.

What this suggest is that the investors anticipates a return that is higher when compared to return supplied by bonds. thus, the bond value we decrease and it becomes a discount bond.

Now,

The bond value is given below:

Bond value = [Coupon rate in year 1 / ( 1 + Investor return )1 + Coupon rate in year 2 / ( 1 + Investor return )2 + Coupon rate in year n / ( 1 + Investor return )n ] +  Par value / ( 1 + investor return )n

Thus,

= [ $100 / (1 + 0.13)1 + $100 / ( 1 + 0.13)2... $100 / ( 1 + 0.13)10 ] + $1000 / ( 1 + 0.13 )10

= $542.62 + 294.58

= $837.21

Value of bond will be = $837.213

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Answer:

The opportunity cost for a year will be $240,000.

Explanation:

The opportunity cost of any decision is the second-best alternative that is given up or sacrificed.  

Here, the manager has a farm of 100 acres of land.  

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He can invest this amount and get an interest of 6% per year.  

The opportunity cost of keeping the farm to the manager himself will be

= 6% of $4,000,000

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= $240,000

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<h2>The security system will alert authorities and deter  criminals, protecting your valuables and property. </h2><h2>The security system will give you peace of mind</h2>

Explanation:

Option 1: We cannot say that every visitor will be a thief or criminal. So a "home security system" is to stay alert from danger

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Answer:

Total equivalent units= 4,190

Explanation:

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Answer:

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