Iris Company has provided the following information regarding two of its items of inventory at year-end: There are 160 units of
1 answer:
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Answer:
IRR 6% for Jabob
His friend will need 12 years saving cash to obtain their collegue funds.
Explanation:
We will solve for the rate being the annuity of 3 payment of 800
and the present value 2,138.41
C 800
time 3
PV 2,138.41
rate ?
To solve we can use excel, a financial calculator or trial and error
For excel we will do the following:
write the list of cash through the loan life:
-2,138.41
+800
+800
+800
then we write in the empy cell
=IRR(
select the values and press enter
This will give the IRR which is 6%
For the second assignment:
we need to solve for time:
C 3,800
time n
rate 0.06
PV $31,897
We work out the formula:
Now we solve the right side and apply logarithmic properties
-n = -11.77128325
n = 11.77
It will take 12 years to obtain their target amount
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%
