Answer:
Given:
12% bonds have a face value of $35,000,000
Bonds sold for $37,702,483 based on the market interest rate of 10%.
∴
The interest expense on July 1 can be computed as
Interest expense = Bonds sold × Effective market interest rate (
= 5%)
= $37,702,483 × .05 (1/2 of the effective interest rate)
= $1,885,124
⇒ The interest expense on July 1 is $1,885,124
Answer:
Cost of equity= 8.0%
Explanation:
<em>Cost of equity can be ascertained using the dividend valuation model. The model states that the price of a stock is the present value of future dividends discounted at the required rate of return.</em>
Cost of equity (Ke) =( Do( 1+g)/P ) + g
g - 2.2%, P - 36.72, D - 2.18
Ke = (2.18 ×(1+0.022)) /38.72 + 0.022 ) × 100
= 0.07954 × 100
= 8.0%
Cost of equity = 8.0%
Answer:
B) 1.7
Explanation:
GDP deflator simply shows the occurring event of the level of prices in the economy which is why It is often the ratio of nominal GDP to real GDP.
GDP deflator in 2009 will be:
Norminal GDP
Cost of apple= $1 in 2009
Apple produced =5 in 2009
Cost of oranges= $1.50 in 2009.
Orange produce= 5 in 2009
$1.00*(5)+$1.50*(5)
=5+7.5
=$12.50
Real GDP
Cost of apple= $0.50 in 2002
Apple produced =5 in 2002
Cost of oranges= $1 in 2002
Orange produce= 5 in 2002
0.50*(5)+$1.00*(5)
=2.5+5
=$7.50
GDP deflator = Nominal GDP/Real GDP)
=$12.50/$7.50
=1.666
approximately 1.7
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