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Alex Ar [27]
2 years ago
12

Tomkin Library System issues $5 million in bonds on January 1, 2021 that pay interest semi-annually on June 30 and December 31.

A portion of the bond amortization schedule appears below: Date Cash Paid Interest Expense Decrease in Carrying Value Carrying Value 01/01/2021 $ 5,500,000 06/30/2021 $ 250,000 $ 220,000 $ 30,000 5,470,000 12/31/2021 250,000 218,800 31,200 5,438,800 What is the stated annual interest rate?
Business
1 answer:
Alona [7]2 years ago
4 0

Answer:

10%

Explanation:

Cash paid as semiannual coupon payment is $250,000

semiannual annual interest rate=semiannual coupon payment/face value of the bond.

The face value of the bond is $5,000,000

stated semiannual rate of interest=$250,000/$5,000,000=5%

Stated annual rate of interest =semiannual rate of interest *2

stated annual rate of interest=5%*2=10%

The coupon rate quoted on Tomkin Library Systems is 10% per year

yield to maturity =$220,000/$5,500,000*2=8%

Since the coupon rate is higher than the yield ,the bond was issued at a premium of $500,000 above its face value of $5 million

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solong [7]

Answer:

Ans. The annuity that will be equivalent to the publisher´s advance would be $26.40 per year, for 9 years at 7% interest rate.

Explanation:

Hi, first, let´s bring that $500 to be paid in 9 years to present value, we need to use the following formula.

PresentValue=\frac{FutureValue}{(1+r)^{n} }

Where: r is our discount rate (7%) and n the periods from now when she will receive that $500 amount. This should look like this.

PresentValue=\frac{500}{(1+0.07)^{9} } =271.97

Ok, so the equivalent amount of money today of those $500 in nine years is $271.97, but the author wants $100 today so the remaining amount has to be used to find the equal annual payments to be made in order to be equivalent to re remaining balance ($171.97). We now need to use the following equation.

Present Value=\frac{A((1+r)^{n}-1 )}{r(1+r)^{n} }

And we solve for "A" like this

171.97=\frac{A((1+0.07)^{9}-1 )}{0.07(1+0.07)^{9} }

171.97=\frac{A(0.838459212 )}{0.128692145}

171.97=A(6.515232249)

A=\frac{171.97}{6.515232249} = 26.40

Therefore, the equivalent amount of money of $500 in 9 years is $100 today and $26.40 every year, at the end of the year, for nine years.

Best of luck.

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3 years ago
Suppose that a chicken farm uses a nearby stream to dispose of the wastes released by its chickens. These wastes flow downstream
Julli [10]

Answer:

d. Charities

Explanation:

Charity is one  the ways of solving or dealing with externalities that affect a society, without the intervention of the government. This involves the effort of a charitable organization in raising enough money to do something useful for the society to mitigate such externalities affecting it.

As stated in the question above, we can see that the environmental organization is a charitable organization, who have taken it upon itself to advance the course of campaigning against far’s pollution. It is a nonprofit organization that raises money through donations, in order to help finance the campaign. Their main objectives focused on the well-being  the local community.

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Answer: dan needs a faster pace

Explanation:

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mote1985 [20]

Answer:

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Explanation:

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What is a disadvantage of government bonds?
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