Answer:
$1,138.92
Explanation:
Current bond price can be calculated present value (PV) of cash flows formula below:
Current price or PV of bond = C{[1 - (1 + i)^-n] ÷ i} + {M × (1 + i)^-n} ...... (1)
Where:
Face value = $1,000
r = coupon rate = 7.2% annually = (7.2% ÷ 2) semiannually = 3.6% semiannually
C = Amount of semiannual interest payment = Face value × r
C = $1,000 × 3.6% = $36
n = number of payment periods remaining = (12 - 1) × 2 = 22
i = YTM = 5.5% annually = (5.5% ÷ 2) semiannually = 2.75% semiannually = 0.0275 semiannually
M = value at maturity = face value = $1,000
Substituting the values into equation (1), we have:
PV of bond = 36{[1 - (1 + 0.0275)^-22] ÷ 0.0275} + {1,000 × (1 + 0.0275)^-22}
PV of bond = $1,138.92.
Therefore, the current bond price is $1,138.92.
Answer:
Subtract vacancy and credit costs from potential gross income
Explanation:
Effective gross income (EGI) is actually the ratio or relationship that exists between the sale price of a property and effective gross income of that same property.
It is the potential gross income added to other income when vacancy and credit costs are subtracted from it.
EGI is used to determine the value of a rental property and the cash that the property generates.
The US general population is far too diverse and the population too large. There is bound to be issues and disagreements on almost all laws that would be passed. With the amount of laws being passed in the state and national government nowadays, people would literally spend most of their waking hour voting rather than being useful members of the society
:)
Answer:
The dam should be constructed. The investment discounted payback is 25 years.
Explanation:
We have to make a cash flow for this case with the given data. See the document attached.
We consider an Initial cost of 30 millions in period 0, then we have every periods benefit of 2.800.000 and 100000 direct cost.
With those, is obtained net cash flow for each year (period), if we consider the given rate of interest, can be calculated the discounted cash flow
To know when this project covers all the investment, we have to consider the cumulative discounted cash flow. We have to see in the cash flow chart when the cumulative discounted cash flow break the 0 (became higher than 0).
In this case , that will be at period 25. So we have to wait 25 years to recover the initial cost. Considering that the dam usually has a lifetime higher than that time, the project at this scenario, should be done.
