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iogann1982 [59]
4 years ago
15

On January 1, 2015, East Lansing, Inc, issues $2,000,000 of 10 percent, 5-year bonds that pay interest of $100,000 semiannually.

The market rate is 8 percent at the time of issuance. The issue price of the bonds is:____a. $1,852.810 b. $1888,970 c. $1.999.970 d. $2,162.290

Business
1 answer:
Trava [24]4 years ago
5 0

Answer:

The answer is option D

Explanation:

The bond can be issued at par, at a discount or at a premium depending on the coupon rate and the market interest. The price of the bond which pays semi annual coupon can be calculated using the formula of bond price. The formula to calculate the price of the bond is attached.

First we need to determine the semi annual coupon payment, periods and YTM.

Semi annual coupon payments = 2000000 * 0.1 * 6/12 = 100000

Semi annual periods = 5 * 2 = 10

Semi annual YTM = 0.08 * 6/12 = 0.04

Bond Price = 100000 * [(1 - (1+0.04)^-10) / 0.04]  +  2000000 / (1+0.04)^10

Bond Price = $2162217.916

The price of the bond is thus $2162290 approx. The difference in answers is due to rounding off.

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In a small, closed economy national income (GDP) is $750.00 million for the current month. Individuals have spent $300.00 millio
Gwar [14]

Answer:

Investment is $50 million as shown below.

The national savings is -$150m as government spent more than it received in taxes.

The national savings and the investment moving in different directions shows that the economy is running a deficit budget

Explanation:

The formula for computing GDP is given as:

GDP = C + I + G + (Ex - Im)

Where C=Consumption

I=investment

G=Government expenditure

Ex=Export

Im=Import

In this case,neither export nor import is applicable

The formula becomes:

GDP=G+I+C

Rewritten I=GDP-C-G

I=750-300-400

I=$50m

National savings is the difference between what government in taxes and government exenditure.

National savings =T-G

National savings=250-400

National savings=-150m

3 0
3 years ago
Financial intermediaries exist because small investors cannot efficiently _______.
rusak2 [61]

Answer:

The correct option is C,small investors cannot efficiently diversify their portfolios, assess credit risk of borrowers, or advertise for needed investments.

Explanation:

Financial intermediaries are those institutions that link the surplus side,those with cash surplus to requirement and the deficit side,those that are short of the required amount of cash for investment purposes.

Financial intermediaries as experts in the field have the requisite knowledge of the market,skills and experience to diversify portfolio.

Diversification involves ascertaining the various instruments the funds available be invested in and the proportion to invest in each .

It is also noteworthy to determine the credit risk of the borrowers to ascertain how risky the investment is and the appropriate level of return.

Finally,the intermediaries advertise the needed investments,for instance an Initial Public Offer could be advertised by prospectus.

3 0
3 years ago
Read 2 more answers
Newhard Company assigns overhead cost to jobs on the basis of 111% of direct labor cost. The job cost sheet for Job 313 includes
tekilochka [14]

Answer:

a. The total manufacturing cost assigned to Job 313 is $49,600

b.  The unit product cost for Job 313 is $32

Explanation:

a. The computation of the total manufacturing cost is shown below:

= Direct materials cost + direct labor cost + overhead cost

= $27,656 + $10,400 + 111% of direct labor cost

= $27,656 + $10,400 + $11,544

= $49,600

b. The formula to be used for calculating the unit product cost which is shown below

= Total manufacturing cost ÷ number of units produced

=  $49,600 ÷ 1,550 units

= $32

3 0
3 years ago
Sterling Boat Company makes inexpensive aluminum fishing boats. Production is seasonal, with considerable activity occurring in
nataly862011 [7]

Answer:

$585,000

Explanation:

Using high-low method

Variable cost = Total cost (high activity) - Total cost (low activity) / Highest activity unit - Lowest activity unit

Variable cost = 720,000 - 450,000 / 100

Variable cost = 270,000 / 100

Variable cost = 270

Variable cost = Cost - Fixed cost

Now 720,000 = (200) * 2,700 - Fixed cost

- FIxed cost = 540,000 - 720,000

- Fixed cost = -180,000

Fixed cost = 180,000

Now Cost for 150 = 2,700 (150) + 180,000

= 405,000 + 180,000

= $585,000

4 0
3 years ago
Sonya is the database administrator for RedTriangle media. She is responsible for validating the data model to be used by the DB
iragen [17]

Answer: Development task

Explanation:

 Development task is basically refers to the predictably stage of the project which is associated with the next period of development stage.

In the development stage, the project are being developed by using new technology and the services for overcoming the existing project drawbacks. It is basically developed by the Robert Havighurst in the year 1948.

Therefore, the above given situation is best example of the development tasks.

5 0
4 years ago
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