Answer:
$1,123.69
Explanation:
We can use the yield to maturity formula to determine the current market price of the bonds.
YTM = {coupon + [(face value - market value)/n]} / [(face value + market value)/2]
- YTM = 5.3% / 2 = 2.65%
- coupon = $1,000 x 7% x 1/2 = $35
- face value = $1,000
- n = 9 years x 2 = 18
0.0265 = {35 + [(1,000 - M)/18]} / [(1,000 + M)/2]
0.0265 x [(1,000 + M)/2] = 35 + [(1,000 - M)/18]
0.0265 x (500 + 0.5M) = 35 + 55.56 - 0.05555M
13.25 + 0.01325M = 90.56 - 0.05555M
0.0688M = 77.31
M = 77.31 / 0.0688 = $1,123.69
Answer: 26.15
Explanation: The degree of operating leverage is calculated as the percentage change in operating income in relation to a percentage change in sales.
Thus the degree of operating leverage of Gateway inn is calculated thus:
DOL = Cont Margin/Operating income
DOL = 47/(4.6-3.3)
DOL = 47/1.3
DOL= 26.15
Answer:
to calculate depreciation using the sum-of-the-years'-digits method:
n(n+1) divided by 2 = [12(13)] / 2 = 78
depreciable value = cost - salvage value = $469,000 - $40,000 = $429,000
- depreciation year 1 = 12/78 x $429,000 = $66,000
- depreciation year 2 = 11/78 x $429,000 = $60,500
- depreciation year 3 = 10/78 x $429,000 = $55,000
the formula used to calculate depreciation using the double-declining-balance method is:
2 x cost of the asset x depreciation rate
- depreciation year 1 = 2 x $469,000 x 1/12 = $78,167
- depreciation year 2 = 2 x ($469,000 - $78,167) x 1/12 = $65,139
- depreciation year 3 = 2 x ($390,833 - $65,139) x 1/12 = $54,282
Answer:
d. $175,380.
Explanation:
Net present value for Project Nuts = (Net annual cash inflow*PV of annuity at 10%, 6 period) - Initial investment
Net present value for Project Nuts = ($156000*4.355) - $504,000
Net present value for Project Nuts = $679,380 - $504,000
Net present value for Project Nuts = $175,380
