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Vitek1552 [10]
4 years ago
8

Abbott, Inc., plans to issue $500,000 of ten percent bonds that will pay interest semiannually and mature in five years. Assume

that the effective interest rate is 12 percent per year compounded semiannually. Calculate the selling price of the bonds.
Business
1 answer:
ikadub [295]4 years ago
7 0

Answer:

$463,202.25

Explanation:

The computation of the selling price of the bond is shown below:

= Present value of interest + Present value of maturity

where,

In semi-annually, the rate of interest is divided by 2 and the time period is double

The Present value of interest equals to

= $500,000 × 5% × 7.36009

= $184,002.25

The 7.36009 is a PVIFA. Refer to the PVIFA table

And, the Present value of maturity equals to

= $500,000 × 0.5584

= $279,200

The Present value factor is computed below:

= 1÷( 1 + rate)^time

=1÷(1 + 0.06)^10

Now put these values to the above formula  

So, the value would equal to

=  $184,002.25 +  $279,200

= $463,202.25

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4 0
4 years ago
The local government decides to impose a sales tax on some selected items. On item X the final prices increases almost the full
Aloiza [94]

Answer:

It isn't a violation of the law of demand. It is as a result of the elasticity of demand.

A tax is a compulsory sum levied on a good or service. Taxes increases the price of products. In determining whom should bear the greater burden of the tax between the consumer and the seller, elasticities are usually considered. The party with either a relatively inelastic supply or demand bears the greater burden of tax while the party with the more elastic demand or supply bears less burden of tax.

Demand (supply) is elastic if a small change in price has a greater effect on the quantity demanded (supplied).

Demand (supply) is inelastic if a small change in price has little or no effect on the quantity demanded (supplied).

For good X, consumers have an inelastic demand so they bear more of the tax Burden. As a result of the tax, price increases, yet the quantity demanded doesn't change. Therefore, the total revenue would rise.

For good Y, consumers have an elastic demand. Therefore, they bear less burden of tax. As a result of the increase in price, the quantity demanded falls and total revenue falls.

Explanation:

5 0
3 years ago
The production, purchase, and sale of goods in a world-wide market is known as the _____.
Akimi4 [234]
The answer you are looking for is

Global economy
8 0
3 years ago
Read 2 more answers
A moment of truth occurs when employees and ________ have contact. Group of answer choices Skill Customer Product Place
Korvikt [17]

Answer:

Customer.

A moment of truth occurs when employees and the customer have contact.

I hope this helped at all.

5 0
3 years ago
The Brown Jug has paid annual dividends of $0.61, $0.64, $0.71, $0.82, and $0.88 per share over the past 5 years, respectively.
Vera_Pavlovna [14]

Answer:

Option (d) 9.59%

Explanation:

Data provided in the question:

Annual dividends paid by the Brown jug

$0.61, $0.64, $0.71, $0.82, and $0.88 per share over the past 5 years

Now,

Present value = $0.61

Future value = $0.88

Time = 4 years                    [as there is no interest for the year 1]

Now,

Future value = Present value × (1 + r )ⁿ

here,

r is the geometric average dividend growth rate

$0.88 = $0.61 × (1 + r )⁴

or

(1 + r )⁵ = 1.4426

or

1 + r = 1.0959

or

r = 0.0959

or

r = 0.0959 × 100% = 9.59%

Hence,

Option (d) 9.59%

6 0
4 years ago
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