Eastern Corporation has $1,000 par value bonds with 4 years to maturity. The bonds pay an 8% coupon rate with semi-annual coupon
interest payments. The bond's closing price is quoted at 101.25. Suppose you purchase the bond for the closing price. What is the bond's yield to maturity?
1 answer:
Answer:
7.64%
Explanation:
For computing the yield to maturity we have to applied the RATE formula i.e to be shown in the attachment
Given that,
Present value = $1,000 × 101.25 = $1,012.50
Future value or Face value = $1,000
PMT = 1,000 × 8% ÷ 2 = $40
NPER = 4 years × 2 = 8 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after applying the above formula,
The yield to maturity is
= 3.82% × 2
= 7.64%
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Answer:
The answer is "$ 140".
Explanation:
The company produces the quantity MR = MC and if there is no quantity MR = MC, the amount throughout the case MR is just greater and closest to MC to maximize profit.
Here MR = marginal income and marginal cost =MC
MR =
In the above table, we could see that the amount MR = MC = 8 isn't available. Thus it produces the amount where the MR
is only larger but nearest to MC.
25 unit MR =
(Minimum and superior to MC)
MR of 30 units, similarly MR of 30 units.
Consequently, 25 units were produced and 12.5 units were produced.
Currently, XYZ breaks the agreement and produces three more so thus maximum quantity produced on a market = 25 + 5 = 30 and through the above table they see which if quantity = 30, price = 16.
XYZ produces 12.5 + 5 = 17.5 output from 30 units.
Cost Total = TVC + TFC
Total TVC = Total Cost for Variable TFC = Maximum Cost of TFC = 0.
If MC is stable, TVC = MC Q = 8
q, where Q = exposed to the real produced and XYZ produces 17.5 in this case.
Total expenditure (TC+) is TVC = TFC = 8 17.5.
Take control = TR - TC = TC = 16 17.5 - 8
17.5 = 150.
So the business XYZ is profiting = 140