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Nonamiya [84]
3 years ago
11

Consider a $1,000 par value bond with a 9% annual coupon. The bond pays interest annually. There are 20 years remaining until ma

turity. You have expectations that in 5 years the YTM on a 15-year bond with similar risk will be 7.5%. You plan to purchase the bond now and hold it for 5 years. Your required return on this bond is 10%. How much would you be willing to pay for this bond today
Business
1 answer:
Vinvika [58]3 years ago
4 0

Answer:

The multiple choices are:

a. $1132

b. $1044

c. $ 962

d. $1153

e. $ 988

The correct option is C,$962

Explanation:

The price a rational and prudent investor like me would be willing to pay for the bond today is the present worth of future cash inflows receivable from the bond issuer,which comprises of annual coupon interest and the face value at maturity.

=-pv(rate,nper,pmt,fv)

rate is required rate of return expected by investor of 10%

nper is 5 years since the investor intends to hold the bond for 5 years

pmt is the annual coupon interest=$1000*9%=$90

fv is the face value of $1000

=-pv(10%,5,90,1000)=$962.09

The current  price is $962

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Harry has just inherited $300,000. Harry has decided to quit his job and go to school full time for the next five years by livin
never [62]

Answer:

$ 75131

Explanation:

Given:

Amount inherited = $ 300000

Present amount of annuity = $ 300000

Interest rate, i = 8% = 0.08

number of years, n = 5

Now,

the formula for the present amount of annuity is given as:

Present amount of annuity = P[\frac{1-(1+i)^{-n}}{i}]

where,

P is the periodic payment

n is the number of years

now, on substituting the values, we get

$ 300000 = P[\frac{1-(1+0.08)^{-5}}{0.08}]

or

$ 300000 = P × 3.993

or

P = $ 75131.48 ≈ $ 75131

hence, the amount he can withdraw is $ 75131

3 0
3 years ago
Barnes manufactures a specialty food product that can currently be sold for $22 per unit and has 20,000 units on hand. Alternati
FromTheMoon [43]

Answer:

It is more convenient to continue processing.

Explanation:

Giving the following information:

Barnes manufactures a specialty food product that can currently be sold for $22 per unit and has 20,000 units on hand. Alternatively, it can be further processed for $12,000 and converted into 12,000 units of Exceptional and 6,000 units of Premium. The selling price of Exceptional and Premium are $30 and $20, respectively.

We don't have the information regarding the costs of processing further. Therefore, we will base our analysis in sales.

Sell now= 22*20,000= $440,000

Continue processing= 12,000*30 + 6,000*20= $480,000

It is more convenient to continue processing.

3 0
3 years ago
________________ represent a series of thick and thin vertical linesreadable by computerized optical scanners that represent num
amm1812

Answer: Bar codes

Explanation:

A barcode is a way of representing data in a machine-readable and visual form. In the past, barcodes illustrated data by placing the parallel lines at intervals and altering the widths. Nowadays, barcodes known as one-dimensional (1D) or linear are scanned by optical scanners. Also, the two-dimensional (2D) barcodes were manufactured using dots, rectangles, hexagons and some geometric patterns, known as matrix barcodes. Barcodes are used for the tracking of products.

3 0
3 years ago
Can anyone help plz?
Ulleksa [173]

Explanation:

this is easy to understand and even to answer so if I tell u the answer

how will u learn to do things yourself. By me being a business Woman i learn't that in order to gain sumthing in life u have to do it yourself

7 0
3 years ago
On April 12, Hong Company agrees to accept a 60-day, 10%, $4,500 note from Indigo Company to extend the due date on an overdue a
yulyashka [42]

Answer:

Dr Notes Payable 4500

Dr Interest expense 75

Cr Cash 4575

Explanation:

Based on the information given if On April 12, the Hong Company agrees to accept a 60-day which include the amount of $4,500 note from Indigo Company which means that in order to extend the due date on an overdue account the journal entry that Indigo Company would make, when it records payment of the note on the maturity date is :

Dr Notes Payable 4500

Dr Interest expense 75

(4500/60 days)

Cr Cash 4575

(4500+75)

7 0
3 years ago
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