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Agata [3.3K]
3 years ago
11

Radoski Corporation's bonds make an annual coupon interest payment of 7.35% every year. The bonds have a par value of $1,000, a

current price of $920, and mature in 12 years. What is the yield to maturity on these bonds
Business
1 answer:
gtnhenbr [62]3 years ago
5 0

Answer:

YTM = 0.6940%

Explanation:

THe Yield to Maturity (YTM) is the return that you expect from the bond if you held the bond till maturity.

The formula would go as:

YTM = \frac{F}{P}^{\frac{1}{n}} -1

Where

F is the face value, or par value

P is the current price

n is the time period, maturity period

Given,

F = 1000

P = 920

n = 12, we have:

YTM = \frac{F}{P}^{\frac{1}{n}} -1 = \frac{1000}{920}^{\frac{1}{12}} -1=0.006972

Thus, the yield to maturity would be:

YTM = 0.6940%

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Answer:

NPV = $23,146.99

Explanation:

The net present value is the present value of after tax cash flows from an investment less the amount invested.

The NPV can be calculated using a financial calculator:

Cash flow in year o = $- 130,000 

Cash flow each year in year 1 and 2 = 0

Cash flow each year in year 3 to 12 = $34,000

I = 12%

NPV = $23,146.99

To find the NPV using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute

I hope my answer helps you

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How environmental markets can improve an energy market portfolio
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Environmental markets can support international collaboration on energy technology to stable destiny strength materials and mitigate their environmental impact, such as via improved energy.

<h3>What do you understand about environmental markets?</h3>

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A sales tax of $1 per unit of output is placed on one firm whose current equilibrium price is $5 and current equilibrium quantit
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Answer:

B

Explanation:

B is the correct answer

3 0
3 years ago
If a firm accepts less than all of its prospective projects with positive NPVs when evaluated at their own risk-adjusted costs o
gtnhenbr [62]

Answer: True

Explanation:

  Yes, the given statement is true that the employing capital rationing is one of the process in which it placing some restriction on the investment amount of the project in an organization.

 In the capital rationing strategy, if the company accepts less amount from all its prospective projects along with some positive net profit value (NPVs) the it is evaluated on the basis of their own risk.

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 Therefore, The given statement is true.

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