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zheka24 [161]
3 years ago
7

Bob is evaluating a bond issue to determine the right price for the bond. In his evaluation, he gathers the following informatio

n:
N = 8 years INT = .025 or 2.5% PMT = $25 FV = $1,000 (par value)
What is the above bond issue worth in today's dollars?
a. $1,000
b. $1,181.63
c. $1,200.50
d. None of the above

Business
1 answer:
Elanso [62]3 years ago
5 0

Answer:

The price of the bond is $1000. Thus, option a is the correct answer.

Explanation:

The price of a bond is calculated using the present value of the interest payments made by the bond, which is in the form of an annuity, plus the present value of the face value of the bond. The present value is calculated by discounting the annuity of interest and the face value by the YTM or yield to maturity. In case YTM is not provided, we assume that it is same as or equal to the coupon rate paid by the bond.

The formula for the price of the bond is attached.

Bond Price = 25 * [(1 - (1+0.025)^-8) / 0.025]  +  1000 / (1+0.025)^8

Bond Price = $1000

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3 years ago
intends on adding a new product line. the contribution margin ratio for the new product is 0.2. they have a target operating inc
FrozenT [24]

Answer:

The total fixed costs must be:

$36,000.

Explanation:

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b) The focus should be on the break-even formula for dollar sales with a target profit.  When the formula is reversed, the fixed costs can be calculated as shown above.

3 0
2 years ago
James, a production manager at a growing company, has mastered the processes and procedures of overall management of the ongoing
IgorLugansk [536]

Answer:

Vicarious learning

Explanation:

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3 0
3 years ago
Globalization Multiple Choice has greatly improved living standards around the world. has significantly reduced living standards
nekit [7.7K]

Answer:

The correct answer is letter "A": has greatly improved living standards around the world.

Explanation:

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7 0
3 years ago
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ki77a [65]

Answer:

D participating unit investment trust

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