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krok68 [10]
3 years ago
6

A 10-year $1,000 bond pays a nominal rate of 9% compounded semi-annually. If the market interest rate is 12% compounded annually

and the general inflation rate is 6% per year, find the actual-and constant-dollar amounts (in time-0 dollars) of the 15th interest payment on the bond.
Business
1 answer:
skelet666 [1.2K]3 years ago
3 0

Answer:

a) actual dollar = $60

b) Constant dollar of the 15th payment = $38.710

Explanation:

Facts from the question:

The Face value of the bond = $1,000

Nominal Interest rate = 12% and it compounded annually

General inflation rate = 6%

The question: Determine the 15th interest payment on the bond.

Step 1: The coupon for the amount of semi annual payment is as follows:

Coupon= (Interest rate/ Number of compounding times in a year) x face value of the bond

= (0.12/2) x 1000

= $60 -= Actual dollar amount

Step 2: Determine the 15th payment and this will represent the middle of the 8th year or (7 1/2) year.

To calculate this=

Constant dollar amount of the 15th interest payment

= Actual dollar amount (above) / (1 + inflation rate)∧n

where n= the number of years = 7.5 years

= $60 / (1 + 0.06) ∧7.5

= $60/1.55

= $38.710

This means the constant dollar amount on that 15th payment = $38.710

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Answer:

a) make well-reasoned conclusions and solutions ; & b) begin jotting down a rough draft right away to capture their ideas.

Explanation:

Effective Business message should be - complete, clear, concise, concrete, correct, courteous, coherent.

Rough draft is good for brainstorming & initial preliminary creation stage of business message. After having a bunch of ideas : its important to well arrange them in a coherent, clear way & giving complete, concise structure. This implies better understanding of conclusions, solutions.

4 0
2 years ago
In the RST partnership, Ron's capital is $80,000, Stella's is $75,000, and Tiffany's is $50,000. They share income in a 3:2:1 ra
uysha [10]

Answer:

C. Stella, Capital will be debited for $4,000.

Explanation:

As for the provided information, we have,

Out of all the partner's Tiffany is retiring.

Tiffany's capital balance = $50,000

On his retirement he is paid $60,000

Since no goodwill is recorded, the excess amount paid over capital = $60,000 - $50,000 = $10,000, will be debited in remaining partner's ratio.

Ron's share in these $10,000 = $10,000 \times 3/(3+2) = $6,000

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3 0
3 years ago
Which statement would not be a way for the government to reduce the national debt?
Anastasy [175]

Answer:

Increasing government spending in the form of infrastructure and  welfare

Explanation:

In order to reduce the national debt, the government need to take a conscious measure to use the government budget as little as possible.

Investment in infrastructures (such as military bases,. building new roads or parks) and government programs (such as expensive healthcare or government funded jobs) tend to take a large amount from the government budget. This will most likely resulted in the increase of national debt.

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To maximize profit, a perfectly competitive firm:_____.
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Answer:

D

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A perfect competition is characterized by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.  

In the long run, firms earn zero economic profit.  If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.  

Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.  

Profit is maximised where marginal cost equals marginal revenue.

3 0
3 years ago
A check drawn by a company in payment of a voucher for $965 was recorded in the journal as $695. What entry is required in the c
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Answer:

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The cash has been credited with $695 instead of $965 which means that $270 has been credited short. Same way, the liabilities have been debited by $270 short. So, we will have to reverse the entry ie. debit Accounts Receivable; credit Cash

8 0
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