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alexandr402 [8]
3 years ago
8

The Sisyphean Company has a bond outstanding with a face value of $1,000 that reaches maturity in 8 years. The bond certificate

indicates that the stated coupon rate for this bond is 8​% and that the coupon payments are to be made semiannually. Assuming the appropriate YTM on the Sisyphean bond is 9.6​%, then this bond will trade at
Business
1 answer:
MakcuM [25]3 years ago
7 0

Answer:

this bond will trade at $912.05.

Explanation:

There is an Inverse relationship between the yield and the price of bond.

  1. As the yield goes up, the price of bond goes down, that is trade at discount.
  1. Whereas, as the yield goes down, the price of bond goes up, that is trade at a premium.

The Bond investment in Sisyphean Company is trading at a discount.

The Price of the Bond, PV can be determined as follows..

PV = ?

FV = $1,000

PMT = ($1,000 × 8​%) ÷ 2 = $40

P/yr = 2

YTM = 9.6​%

n = 8 × 2 = 16

Using a Financial Calculator, the Price of the Bond, PV  is $912.05.

You might be interested in
The Hype Company's currently outstanding bonds have a 10 percent coupon and a 11 percent yield to maturity. Hype believes it cou
zavuch27 [327]

Answer:

After tax cost of debt is 6.82%

Explanation:

Currently the yield to maturity is the  pre-tax cost of debt for Hype company, however the after tax cost of debt considers that the bonds are tax deductible , its actual is less than the pre-tax cost of debt , hence the after-tax cost of debt is shown below

After tax cost of debt=yield to maturity *(1-tax)

after tax cost of debt=11%*(1-0.38)

after tax cost of debt=11%*0.62

after tax cost of debt =6.82%

This confirms that cost of debt is usually lower than cost of equity , where shareholders would want an extra premium to compensate them for the increased risk taken by investing in the business.

5 0
4 years ago
Assume you have $2,000 in a savings account at the beginning of the year and the price level is equal to 100. If the price level
SVEN [57.7K]

Answer:

$1,667.67

Explanation:

Given:

Balance in savings account at the beginning of the year = $2,000

Price level at the beginning of the year = 100

Price level at the end of the year = 120

Anything that is worth $120 in the beginning of the year is worth $100 at the end of the year.

Anything worth $1 in the beginning is worth 100/120 at the end.

So, $2,000 is worth \frac{100}{120}\times2,000 = $1,667.67 at the end of the year.

Real value of savings is close to $1,667.67.

6 0
4 years ago
Fogerty Company makes two products, titanium Hubs and Sprockets. Data regarding the two products follow:
sveta [45]

Answer:

activitity rate:

\left[\begin{array}{ccccc}$Activity&$Driver&$cost&$Total&$Rate\\$Machine Setups&setups&72,000&400&180\\$Special processing&$machine hours&200,000&5,000&40\\$General factory&$direct labor hours&816,000&24,000&34\\\end{array}\right]

sprocked unit cost: $ 38.95

hub units cost:        $  93.00

Explanation:

We divide teh cost pool over the total of the cost driver.

This give us the activitty rate.

Then we multiply each rate by the use of each product:

And divide by the total units to get the unti manufacturing overhead

\left[\begin{array}{ccc}$Activity&$Hubs&$Sprockets\\$Machine Setups&18,000&54,000\\$Special processing&200,000&0\\$General factory&272,000&54,4000\\$Total&490,000&598,000\\$Units&10,000&40,000\\$Overhead per unit&49&14.95\\\end{array}\right]

Finally we add the cost component:

Sprocked:

materials $ 18 + $ 15 x 0.40 units + $ 14.95 = 38.95

Hubs

materials $ 32 + $ 15 x 0.80 units + $ 49 = 93

7 0
3 years ago
What is the simplified base for the function f(x) = 2(3/272x)?
madam [21]
The answer to this is C
7 0
3 years ago
You should indicate that you are available for an interview in which part of a cover letter?
nlexa [21]

Answer: NOT the second paragraph

Explanation: ed 2021

7 0
3 years ago
Read 2 more answers
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