Answer:
The price of the bond is $1000. Thus, option a is the correct answer.
Explanation:
The price of a bond is calculated using the present value of the interest payments made by the bond, which is in the form of an annuity, plus the present value of the face value of the bond. The present value is calculated by discounting the annuity of interest and the face value by the YTM or yield to maturity. In case YTM is not provided, we assume that it is same as or equal to the coupon rate paid by the bond.
The formula for the price of the bond is attached.
Bond Price = 25 * [(1 - (1+0.025)^-8) / 0.025] + 1000 / (1+0.025)^8
Bond Price = $1000
Answer:
c. sunk cost.
Explanation:
Because in short run, fixed cost doesn't changes with output, that is whether we produce or not, we have to pay for it, so it is considered as Sunk cost. Also like Sunk cost, we don't make decisions with fixed costs.
It is important so no one in the agreement screws the other person over
Answer:
The withdrawals will be of $ 11,379.014 per month
Explanation:
Future value of the annuities:
C 750.00
time 360(30 years x 12 monhs per year)
rate 0.008333333 (10% / 12 months)
PV $1,695,365.9436
C 250.00
time 360 (30 years x 12 monhs per year)
rate 0.005 (6% / 12 months)
PV $251,128.7606
Total 1,695,365.84 + 251,128.76 = 1.946.494,6
and from here we withdraw for 25 years:
PV 1,946,495
time 300 (25 years x 12 months)
rate 0.004166667 (5% / 12 months)
C $ 11,379.014
The fee is called an "excess mileage fee" she she has driven more miles than she was allowed in her lease agreement.
