Answer:
Break even sales will be $2700
So option (b) will be correct option
Explanation:
We have given fixed cost = $1400
Sells per unit = $27 each
And variable cost per unit = $13 each
So contribution margin ratio
We know that break even sales is given by
Break even sales
So option (b) will be correct answer
Answer:
6.52%
Explanation:
For computing the nominal yield to call, first we have to find out the present value by applying the present value formula which is shown in the attachment below:
Future value = $1,000
Rate of interest = 6.50% ÷ 2 = 3.25%
NPER = 15 years × 2 = 30 years
PMT = $1,000 × 8.25% ÷ 2 = $41.25
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, after solving this, the present value is $1,166.09
Now to determine the yield to call we use the RATE formula that is shown in the attachment below:
Present value = $1,166.09
Future value or Face value = $1,120
PMT = $1,000 × 8.25% ÷ 2 = $41.25
NPER = 6 years × 2 = 12 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after solving this, the bond nominal yield to call is
= 3.26% × 2 years
= 6.52%
