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FinnZ [79.3K]
3 years ago
9

Big Canyon Enterprises has bonds on the market making annual payments, with 18 years to maturity, a par value of $1,000, and a p

rice of $965. At this price, the bonds yield 7.7 percent. What must the coupon rate be on the bonds?
Business
1 answer:
Digiron [165]3 years ago
7 0

Answer:

7.3%

Explanation:

Bond price is the sum of present value of coupon payment and face value of the bond. If the price is available the coupon payment can be calculated by following formula

As per given data

n= 18 years

Par value = $1,000

Price = $965

YTM = 7.7%

As we have the value of the bond we need to calculate the coupon payment using following formula:

Price of the Bond = C x [ ( 1 - ( 1 + r )^-n ) / r ] + [ F / ( 1 + r )^n ]

$965 = C x [ ( 1 - ( 1 + 7.7% )^-18 ) / 7.7% ] + [ $1,000 / ( 1 + 7.7% )^18 ]

$965 = C x 9.57 + $263.10

$965 - 263.10 = C x 9.57

701.9 = C x 9.57

C = 701.9 / 9.57 = 73.34

Coupon rate = 73.34 / 1000 = 7.334%

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Answer:

Janine is an accountant who makes $30,000 a year. Robert is a college student who makes$8,000 a year. All other things equal, who is more likely to stand in a long line to get a cheap concert ticket?

Robert; his opportunity cost is lower

Explanation:

Robert has loss of potential gain from the alternative available, his low income will made him to queue in order to get the concert ticket

5 0
3 years ago
Use the following selected 2016 balance sheet and income statement information for Home Garden Supply Co. (in millions) to compu
zepelin [54]

Answer:

3.76 times

Explanation:

The computation of the asset turnover is shown below:

Asset turnover = Net sales ÷ Average total assets

= $1,356,504 ÷ $360,600

= 3.76 times

By dividing the net sales from the average total assets, the asset turnover could arrive i.e 3.76 times

This is the answer but the same is not provided in the given options

8 0
3 years ago
Which of the following are in accordance with IFRS? Cash basis accounting Both accrual basis and cash basis accounting Neither a
Anton [14]

Answer:

Accrual basis accounting

Explanation:

Under Accrual basis of accounting, income is recognized when it is earned and not when actual cash is paid or received.

Under cash basis of accounting, income is only recognized when actual cash is received.

Accrual basis of accounting ensures transactions pertaining to a period are recorded in that period and  it depicts more accurate financial picture unlike in cash accounting wherein income for a period might be overstated or understated.

Following cash basis of accounting is not in accord with both US GAAPs (generally accepted accounting principles) and IFRS.

7 0
3 years ago
It's a good idea to call a day or two in advance to confirm your appointment. <br> True <br> False
ki77a [65]

Answer:

true

Explanation:

5 0
3 years ago
Calip Corporation, a merchandising company, reported the following results for October: Sales $413,000 Cost of goods sold (all v
krok68 [10]

Answer:

$243,900

Explanation:

Calip corporation reported the following results for the month of October

Sales= $413,000

Cost of goods sold= $169,100

Total variable sling expenditure= $20,700

Total fixed selling expense= $17,900

Total variable administrative expense= $13,100

Total fixed administrative expense= $30,400

The contribution margin can be calculated by subtracting the total cost of goods sold from the sales

= $413,000-$169,100

= $243,900

Hence the contribution margin for October is $243,900

5 0
3 years ago
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