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vaieri [72.5K]
3 years ago
9

Which of these is not an advantage of entrepreneurship

Business
1 answer:
Alchen [17]3 years ago
8 0

Answer: 2

Explanation: You don't automatically gain foresight when you start a business

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Up in Smoke Tobacco Shops' bond carries a 9 percent coupon, pays interest semiannually, and has 10 years to maturity. What is th
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10%

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Since the bond is selling at a discount, it means that the coupon rate is blow the market rate, so the actual rate must be higher. Since there is only one option with an interest rate above 9%, we must check to see if it works.

10% yearly interest rate = 5% semiannual interest rate

we must determine the PV of the 20 coupons paid and the face value at maturity.

to calculate the PV of the 20 coupons ($45 each) we can use an excel spreadsheet and the NPV function with a 5% discount rate: PV of the coupons = $560.80

the PV of the face value in 10 years = $1,000 / 1.05²⁰ = $376.89

the present value of the coupons and the bond at maturity = $560.80 + $376.89 = $937.69. The PV using a 5% semiannual rate is very similar to $937.75, and since the question asked us to round up to the nearest whole percent, we can assume it is correct.

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