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Annette [7]
3 years ago
9

You bought one of Great White Shark Repellant Co.’s 8 percent coupon bonds one year ago for $1,044. These bonds make annual paym

ents and mature 13 years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 6 percent. The bonds have a par value of $1,000.Required:If the inflation rate was 3.4 percent over the past year, what was your total real return on investment?
Business
1 answer:
GalinKa [24]3 years ago
4 0

Answer:

17.4%

Explanation:

original purchase price 1 year ago = $1,044

current market price:

0.06 = {80 + [(1,000 - MV)/13]} /  [(1,000 + MV)/2]

0.06 x [(1,000 + MV)/2] = 80 + [(1,000 - MV)/13]

0.06 x (500 + 0.5MV) = 80 + 76.92 - 0.0769MV

30 + 0.03MV = 156.92 - 0.0769MV

0.1069MV = 126.92

MV = 126.92 / 0.1069 = $1,187.28

total returns during the year = $80 (coupon) + ($1,187.28 - $1,044) = $223.28

nominal return on investment = $223.28 / $1,044 = 21.387%

real return on investment = [(1 + i) / (1 + inflation)] - 1 = [(1 + 0.21387) / (1 + 0.034)] - 1 = 1.174 - 1 = 0.174 = 17.4%

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Malcolm is a professional writer. He has already published many best-sellers. One of his friends expressed interest in knowing m
maxonik [38]

Answer:

Malcolm is a professional writer. He has already published many best-sellers. One of his friends expressed interest in knowing more about his writing process, so Malcolm showed his friend a few of his first drafts. The friend observed that the drafts were nothing like the final book, and the writing seemed amateurish compared to Malcolm's published work. When asked about it, Malcolm said that it was the normal way of things. In this scenario, the following is the reason of this:

A) ​Malcolm would have revised his work many times before he was satisfied with it.

Explanation:

  • The option A is best reason because generally a writer doesn't break his or her flow while writing and that is what Malcolm would have done. After, he would have revised his work many times until he was satisfied.
  • The option B is not correct as it is not possible to change the book of a writer entirely by the publishing company.
  • The option C is also incorrect as the drafts were not long and cohesive because his friend found the draft amateurish but not perfect.
  • The option D is incorrect as it is not true that writers only create first draft and other people produce all other subsequent drafts.

4 0
3 years ago
Equipment was purchased for $145500. Freight charges amounted to $6500 and there was a cost of $12000 for building a foundation
andrey2020 [161]

Answer:

$26800

Explanation:

Total cost to be capitalized for the assets

= 145500 + 6500 +12000

= $164000

Estimated useful life = 5 years

Salvage value = $30000

Using the straight-line method,

Annual Depreciation = (Cost - Salvage value)/ Number of years

                                   = (164000 - 30000)/5

                                   = 134000/5

                                   = $26800

7 0
3 years ago
For each example listed, decide if the good is a normal good or an inferior good. Make sure you answer from the perspective of t
babymother [125]

Answer:

Billy's mom increases his weekly allowance by $ 55 . As a result, Billy increases the number of apps he downloads on his smartphone.

If with increase in income demand increases, the good will be a normal good. Thus, apps that billy downloads are normal goods.

Susan gets a 15 percent performance bonus at work. She can finally stop eating so many frozen pizzas and eat something more tasty. Frozen pizzas are: Inferior goods

Here with increase in income, the demand for a commodity falls, the so called commodity is a inferior good. Thus, in this case frozen pizzas are inferior goods.

Mike is an appliance salesman. Refrigerator sales in his store have fallen and so has his commission. Mike decides to switch from name brand cereal to generic cereal. Generic cereal is: Inferior goods

If there is a fall in income and thus demand increases, the good is inferior. Thus, in this case generic cereal is an inferior good.

Hair stylist Molly loses a few of her clients. Molly cuts back on the number of smoothies she buys during the week. Smoothies are: Normal goods

If there is a decrease in income and thus demand falls, the good is normal. Thus, smoothies as commodity in this case will be refereed to as normal goods.

5 0
3 years ago
Which economic system meets the most socialeconomic goals?
Gre4nikov [31]

Answer:

Market

Explanation:

6 0
3 years ago
As a human resource manager, how would you recommend that a part-time<br> employee is compensated?
barxatty [35]

Answer:

C. Part-time employees should be compensated with an hourly wage

because the number of hours they may work each month

changes

<u>Multiple-choices</u>

employee is compensated?

A. Part-time employees should be compensated with a salary

because the number of hours they may work each month

changes

O

B. Part-time employees should be compensated with an hourly wage

because the number of hours they work each month is always the

same.

O

C. Part-time employees should be compensated with an hourly wage

because the number of hours they may work each month

changes

O

D. Part-time employees should be compensated with a salary

because the number of hours they work each month is always the

same.

Explanation:

Part-time workers are called to duty on a need basis.  Usually, part-time workers are assigned specific tasks to perform is within a particular duration. Their contribution is measured in terms of hours worked or completed units of output.

Part-time workers contrast with full-time workers who report for duty every working day. Part-time workers are not required to work for certain hours per week or month like full-time workers. The number of hours that a part-time worker works in a week varies from time to time. Therefore, the best way of compensating them is through an hourly rate.

8 0
3 years ago
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