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stepan [7]
3 years ago
6

Assume that a bond makes 10 equal annual payments of $1,000 starting one year from today. The bond will make an additional payme

nt of $100,000 at the end of the last year, year 10. (This security is sometimes referred to as a coupon bond.) If the discount rate is 3.5$% per annum, what is the current price of the bond? (Hint: Recognize that this bond can be viewed as two cash flow streams: (1) a 10-year annuity with annual payments of $1,000, and (2) a single cash flow of $100,000 arriving 10 years from today. Apply the tools you've learned to value both cash flow streams separately and then add.)
Business
1 answer:
ohaa [14]3 years ago
6 0

Answer:

$79,208.48

Explanation:

The computation of the current price of the bond is shown below:-

<u>Number of    Cash flow    PV annuity factor    Discounted cash </u>

<u>years                                                                        flow</u>

1 -10  years     $1,000                 8.3166                      $8,316.6

10 years        $100,000            0.7089188                $70,891.88

Current price of the bond                                        $79,208.48

Refer to the PV annuity factor so that we get to know the discounting factor value.

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Answer:

D

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3 0
3 years ago
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Suppose that the weight of an newborn fawn is Uniformly distributed between 1.8 and 3.3 kg. Suppose that a newborn fawn is rando
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Answer:

That A Newborn Fawn Is Randomly Selected. Round All Answers To Two Decimal Places A. The Mean Of This Distribution Is B. The Standard Deviation Is C. The Probability That The Fawn Will Weigh More Than 2.8 Kg. D. Suppose That It Is Known That The Fawn Weighs Less

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Suppose that the weight of an newborn fawn is uniformly distributed between 2 and 4 kg. Suppose that a newborn fawn is randomly selected. Round all answers to two decimal places

A. The mean of this distribution is

B. The standard deviation is

C. The probability that the fawn will weigh more than 2.8 kg.

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8 0
3 years ago
Discretionary fiscal policy that might occur is​ ______. Automatic fiscal policy that might occur is​ ______. A. a decrease in t
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Answer: a decrease in government expenditure and an increase in taxes by a decision of​ Congress; a decrease in transfer payments and an increase in taxes with no interference by Congress (D)

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Discretionary fiscal policy is a government policy that changes government spending or taxes. The purpose of discretionary fiscal policy is to either expand or shrink the economy. It needs approval from the Congress and President. Its examples are increases in spending on bridges, roads, stadiums etc.

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3 years ago
A firm encountering economies of scale over some range of output will have a
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Answer:

Falling long-run average cost curve

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When a firm encounters economies of scale, which means they are producing the maximum amount of product. When a firm experiences economies of scale, they might have to add more output to generate the input. Sometimes, doubling an input required more than doubling the output that leads to failing long-run average cost curve. The best way to encounter this problem is to find a low-cost method to manufacture goods and services.

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3 years ago
Derby company sells season passes to its entertainment center. the passes sell for​ $75 each and are good for the year. on janua
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<span>18750 Explanation: As per Revenue Recognition Principle, one of the principles is the amount of revenue can be reasonably measured, that means the revenue earned should be measurable. Another principle is costs of earning the revenue can be reasonably measured. Therefore, the revenues and costs should both be reasonably measurable. In the above case, both revenue and cost are measurable. In the above case, the passes are sold in advance because the passes are good for one year, that means the customers paid the money in advance for the whole year on January 1. Advance payments are generally considered as current liabilities in company's balance sheet and the revenue will be recognized with time as the services will be provided. So, in this case, the total revenue is 75 x 3000 = 225, 000 (whole year), Per month revenue will be 225,000/12 = 18,750 .</span>
6 0
3 years ago
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