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Nuetrik [128]
3 years ago
11

Park Corporation issued 10-year bonds with a face value of $10,000,000. The face rate of interest on the bonds was 8%, and Park

agreed to make semiannual payments. The market rate of interest at the time the bonds were issued was 6%. How much cash did Park Corporation receive from the issuance of the bonds
Business
2 answers:
Temka [501]3 years ago
6 0

Answer:

$11,487,747

Explanation:

Issue price of bonds = Present value of interest + Present value of maturity

= (10000000*4%*14.8775)+(10000000*0.5537)

Issue price of bonds = $11,487,747

ankoles [38]3 years ago
4 0

Answer: $11,487,747

Explanation:

When companies need to raise money, bonds issuance is one way to do it. A bond acts as a loan between an investor and a corporation. The investor comes in agreement to give the corporation a specific amount of money for a specific period of time in exchange for periodic interest payments at designated intervals. The investor's loan is repaid when the loan reaches its maturity date.

The issue price of a bond is based on the link between the interest rate that the bond pays and the market interest rate being paid on the same date.

Issue price of bonds = Present value of interest+Present value of maturity

= (10000000×4%×14.8775)+(10000000×0.5537)

Issue price of bonds = 11487747

So answer is $11487747

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2 years ago
A private university offers graduate assistantships to qualified students each year. In exchange for the waiver oftuition, gradu
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Answer:

A. tuition revenues of $4,000 and expenditures of $4,000.

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3 years ago
If the nominal exchange rate between the US dollar and the Canadian dollar is C $ 0.89 to the US dollar, how many dollars is req
Olin [163]

Answer:

1) 2.8 USD

2)There are several methods:

1) Modifying Reserve Requirements

2) Changing Short-Term Interest Rates

3) Conducting Open Market Operations

Explanation:

I) First of all, the nominal exchange rate describes how much foreign currency can be exchanged for a unit of domestic currency, but the real exchange rate indicates how much the goods and services in the domestic country can be exchanged for the goods and services in a foreign country.

If 1USD=0.89CAD, then 1 CAD=1/0.89=1.12USD

Then 2.5 CAD = 2.5*1.12= 2.8 USD so we will need 2.8 USD to get 2.5 CAD.

II) As we know, the movement of the money supply is the responsibility of the monetary policy activities by central banks. There are several methods:

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2) Changing Short-Term Interest Rates: means that it is possible to change the interest rates in short terms to alter the money supply. It’s all about the changing the discount rates. By lowering the rates, it is possible increase the money supply and boost economic activity.  

3) Conducting Open Market Operations: means that it is possible to increase or decrease the money supply conducting open market operations, which affects the funds rate. So the authority who deals with the monetary policy buys and sells government securities in the open market. If the authority wants to increase the money supply, it will purchase government bonds as a result this supplies the securities dealers who sell the bonds with cash, increasing the overall money supply. However, if the authority wants to decrease the money supply, it will send bonds from its account, thus taking in cash and removing money from the economic system as a result, adjusting the funds rate is a heavily anticipated economic event.

3 0
3 years ago
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