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natima [27]
3 years ago
9

What must be the price of a $10000 bond with a 6.8% coupon rate, semiannual coupons, and eight years to maturity if it has a yie

ld to maturity of 8% APR?
Business
1 answer:
Neko [114]3 years ago
3 0

Answer:

Coupon (R) = 6.8% x 10,000 = $680

Face value (FV) = $10,000

Number of times coupon is paid in a year (m) = 2

No of years to maturity = 8 years

Yield to maturity (Kd) = 8% = 0.08

Po = R/2(1- (1 + r/m)-nm) +  FV/ (1+r/m)n m

                      r/m

Po = 680/2(1-(1+0.08/2)-8x2) + 10,000/(1 + 0.08/2 )8x2

                          0.08/2                              

Po = 340(1 - (1 + 0.04)-16)    + 10,000/(1 + 0.04)16

                      0.04                            

Po = 340(1-0.5339) + 10,000/1.8730

                 0.04

Po = 3,961.85 + 5,339.03

Po = $9,300.88

Explanation:

The current market price of a bond is a function of the present value of semi-annual coupon and present value of the face value. The present value of semi-annual coupon is obtained by multiplying the coupon by the present value of annuity factor at 8% for 8 years. The present value of face value is obtained by discounting the face value at the discount factor for 8 years. The addition of the two gives the present value of the bond. All these explanations have been captured by the formula.

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Goodell Corporation just paid its annual dividend of $1.75, today. Dividends for the Goodell Corporation are expected to increas
AlekseyPX

Answer:

current price of Goodell Corporation stock is $48.26

Explanation:

given data

annual dividend = $1.75

expected to increase 1 year = 27.5 percent

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solution

we get here first dividend that is

D1 = 1.75 × (1.275) = 2.23    ...............1

D2 = 2.23 × (1.138) = 2.54    ...............2

D3 = 2.54 × (1.05) = 2.67      ...............3

and

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Answer:

Tax on a case of cola is $4 per case.

The burden that falls on consumers is $1 per case.

The burden that falls on producers is $3 per case

False. This is due to the fact that producers already carry a greater share of the tax burden.

Explanation:

Tax on a case of cola = Amount that consumers pay after the tax has been charged - Amount producers receive = $7 - $3 = $4 per case

Burden on consumers = Amount consumers pay after the tax has been levied - Amount consumers pay before tax was levied = $7 - $5 = $1 per case

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