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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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ivolga24 [154]

Answer:

a. public

b. undersupplied

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Explanation:

THIS IS THE QUESTION

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FREE RIDER

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3 0
3 years ago
On January 4, 2013, Watts Co. purchased 40,000 shares (40%) of the common stock of Adams Corp., paying $800,000. There was no go
antiseptic1488 [7]

Answer:

Investment balance is $742,000

Explanation:

The treatment of associates will be in-accordance with equity method:

The equity method says that the investment must reflect its fair value.

The fair value of the investment = Cost of shares - Dividend's share Received  + Share of Profit invested

Value of Investment = $800,000 - $32000 ($80,000 Total Dividend * 40%)  + Reinvestment through Net Income $80,000 ($200,000 * 40%) = $848,000

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8 0
3 years ago
Which of the following approaches for calculating the market value of a property involves estimating the dollar value associated
pickupchik [31]

Answer:

c. cost approach

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Here the property value should be equivalent to the land cost also add the construction cost and minus the depreciation expense

So as per the given situation, it is the cost approach that determined the market value of the property

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6 0
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Answer:

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