Answer:
Current bond price is $891.74
Explanation:
Coupon rate: 7%
Tenor (Nper): 13 years
Par value: $1,000
YTM (discounting rate): 8.4%
Coupon received annually (PMT) = $1,000 * 7% = $70
Current bond price = present value of coupon received annually + present value of bond
To calculate PV of coupon received, we use excel in formula PV(discounting rate ,Nper,- PMT) = PV(8.4%,13,-70) = $541.30
or calculate manually = 70/(1+8.4%)^13+70/(1+8.4%)^12+…..+70/(1+8.4%)^1 = $541.30
present value of bond = 1000/(1+8.4%)^13 = $350.44
Current bond price = $541.30 + $350.44 = $891.74
Answer:
The correct answer to the following question is Pro forma financial statements.
Explanation:
A subsequent event can be defined as an event which takes place after the reporting period, but before the financial statements of a company are issued. And depending on what kind of event they are like additional information or new events, it will be decided whether these events should be disclosed in a company's financial statement or not.
If it is decided that the subsequent event should be disclosed in the company's financial statement then a pro forma financial statement would be made, in which nature and financial effect of the subsequent event should be disclosed.
Answer:
X=97.24
Explanation:
PV = Present Value = X+2000 by the 16th years
PMT = Payments = $100
FV = Future Value = 2000 at the end of 16 years
n= number of years
Applying the equation of future value for annuity
FV = pmt* ((1+r)ⁿ - 1
)/r
Inputting the values;
2000=100*((1+r)¹⁶-1)/r
Solving for r, gives r = 2.9%
Therefore using the formula for PV for annuity;
PV=PMT*(1-(1/1+r)/r)
X=100*(1-(1/1.029)/0.029
X=100*((1-0.9718)/0.029)
X=100*(0.0282/0.029)
X=97.24
Answer:
Ball can certainly hold Sullivan to a contract for sale of the land. Sullivan in his reply to Ball's enquiry offered to sell the forty-acre tract of land at $60,000 and nothing less. Ball accepted this offer by Sullivan by stating his acceptance.
These exchanges of offer and acceptance meet the terms of a valid contract. Therefore, Ball can always hold Sullivan for contract enforcement.
Explanation:
In making a valid contract, offer and acceptance are key ingredients, with specific consideration. Since the two parties, Ball and Sullivan are agreed on the consideration and have exchanged offer and acceptance, the validity of the contract is enhanced thereupon.