Bank A quotes a bid rate of $.300 and an ask rate of $.305 for the Malaysian ringgit (MYR). Bank B quotes a bid rate of $.306 an
1 answer:
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Answer:
Annual Coupon rate = 66.56990711 / 1000 = 0.06656990711 or 6.656990711% rounded off to 6.66%
Option B is the correct answer
Explanation:
To calculate the price of the bond today, we will use the formula for the price of the bond. We assume that the interest rate provided is stated in annual terms. As the bond is a semi annual bond, the coupon payment, number of periods and semi annual YTM will be,
Coupon Payment (C) = C
Total periods (n) = 13.5 * 2 = 27
r or YTM = 0.064 * 6/12 = 0.032 or 3.2%
The formula to calculate the price of the bonds today is attached.
We will first calculate the value of semi coupon payment made by the bond.
1023 = C * [( 1 - (1+0.032)^-27) / 0.032] + 1000 / (1+0.032)^27
1023 = C * 17.8994796 + 427.2166529
1023 - 427.2166529 = C * 17.8994796
595.7833471 / 17.8994796 = C
C = 33.28495355 rounded off to 33.28
The annual coupon payment will be = 33.28495355 * 2 = 66.56990711 rounded off to 66.57
Annual Coupon rate = 66.56990711 / 1000 = 0.06656990711 or 6.656990711% rounded off to 6.66%
Answer:
1. Book value at end of year 2 = $13,130
2. Depreciation from year 3 for last 3 years = $3,710 each year, that is $11,130 for three years.
Explanation:
As for the provided details, we have:
Cost of machinery = $23,860
Expected life = 4 years
Salvage value = $2,400
Straight line depreciation =
Under straight line method depreciation remains constant for life of asset.
Book value at end of year 2 = $23,860 - ($5,365 2) = $13,130
Thereafter in the beginning of year 3 the estimate is made to realize that the total remaining life expected is 3 years, with salvage value $2,000
Thus, depreciation from year 3 =
Therefore, depreciation from year 3 to year 5 = $3,710 each year.
Total depreciation of last 3 years = $3,710 3 = $11,130