1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
mr Goodwill [35]
3 years ago
11

Paragraph Styles Rolling Coast Inc. issued BBB bonds two years ago. These bonds provided a yield to maturity (YTM) of 11.5 perce

nt. Long-term risk-free government bonds were yielding 8.7 percent at the time. The current risk premium on BBB bonds versus government bonds is half of what it was two years ago. If the risk- free long-term government bonds are currently yielding 7.8 percent, then at what interest rate should Rolling Coast expect to issue new bonds? Group of answer choices 7.8% 8.79 9.2% 10.2% 12.9%
Business
1 answer:
Karo-lina-s [1.5K]3 years ago
5 0

Answer:

Explanation:

The risk premium two years back = 11.5 - 8.7 = 2.8 %

current risk premium = 2.8/2 = 1.4%

Current risk free bond yields 7.8 %

So Rolling Coast expected rate of interest on bonds = 7.8 + 1.4

= 9.2 %

You might be interested in
William's Co. is considering spending $15,000 at Time 0 to test a new product. Depending on the test results, the firm may decid
spin [16.1K]

Answer:

$10,275.03

Explanation:

Years                                                  0            1             2           3            4  

Cash flow                                     -15000  -58000   45000  45000   45000

Successful chance result (62%)  -9300   -35960    27900   27900   27900  

Considered cash flow                 -15000  -35960    27900  27900    27900

Discount factor (14%)                        1         0.877      0.769    0.675     0.592  

Present value                         -15000  (31,543.86)  21,468.14  18,831.71 16,519.04

Net present value = -$15000 - $31,543.86 + 21,468.14  + 18,831.71 + 16,519.04

Net present value = $10,275.03

7 0
3 years ago
Company X has 100 shares outstanding. It earns $1,000 per year and announces that it will use all $1,000 to repurchase its share
Minchanka [31]

Answer:

d) 89.0

Explanation:

The value of the company today is the present value of its cash flows in perpetuity which is the cash flows divided by the required rate of return.

value of the firm=$1000/10%=$10,000

share price=value of the firm/shares outstanding

share price=$10,000/100=$100

number of shares to be repurchased=$1000/$100=10

number of shares after repurchase=100-10=90

note that when 90.91 is rounded to a whole, it turns out to be 92 while 89 is rounded to 90

6 0
3 years ago
Phillis and Trey are married and file a joint tax return. For 2018, they have $4,800 of nonbusiness capital gains, $2,300 of non
nadezda [96]

Answer:

$21,000

Explanation:

NOL, Phillis and Trey's taxable income must be adjusted by:

= Standard deduction - (Interest income + Net non business capital gain)

= $24,000 - [$500 + ($4,800 - $2,300)]

= $24,000 - ($500 + $2,500)

= $24,000 - $3,000

= $21,000

Therefore, the NOL, Phillis and Trey's taxable income must be adjusted by $21,000.

6 0
3 years ago
Which document should a job seeker send to a potential employer or interviewer after the end of the interview process?
Gnom [1K]
You would send a follow up letter
8 0
4 years ago
Read 2 more answers
Mason is restoring a car and has already spent $3500 on the restoration. He could sell the car now for $2800. However, if Mason
frez [133]

Answer:

mason complete the additional work $5000 after that he sell and get profit $200

Explanation:

given data

spent on restoration = $3500

sell car = $2800

additional work = $2000

car price = $5000

to find out

What should Mason do

solution

we say here after spending $3500 selling cost is $2800 so

loss will be 3500 - 2800 = $700

so if additional work is $2000

total present value will be = ( $2800 + $2000 )

total present value = $4800

so now if he sell car at $5000

he get profit = ( $5000 - $4800 )

profit = $200

so mason complete the additional work $5000 after that he sell and get profit $200

7 0
3 years ago
Other questions:
  • Burke Corporation issued 10,000 shares of its no-par common stock in exchange for land with an independently appraised value of
    14·1 answer
  • Koebel Corp uses a job order costing system with manufacturing overhead applied to products on the basis of direct labor hours.
    11·1 answer
  • With the amount of money you received from your paycheck, ($589.69 you want to put 8% of it into your savings account. How much
    7·1 answer
  • The AIAP is designated to achieve What?
    13·1 answer
  • Total spending in an economy is the sum of: personal consumption plus gross private investment plus government spending plus net
    14·1 answer
  • Jaden works for LeoHart. He meets with a team to discuss shareholders’ interests and assign managers to run certain parts of the
    9·1 answer
  • Stock A has a beta of 0.7, whereas Stock B has a beta of 1.3. Portfolio P has 50% invested in both A and B. Which of the followi
    10·1 answer
  • A firm's current profits are $1,400,000. These profits are expected to grow indefinitely at a constant annual rate of 4 percent.
    5·1 answer
  • The Dennis Company reported net income of $50,000 on sales of $300,000. The company has average total assets of $500,000 and ave
    5·1 answer
  • Im starting my own business so I need things that would look cool in tie-dye
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!