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Otrada [13]
3 years ago
11

Grossnickle Corporation issued 20-year, noncallable, 7.5% annual coupon bonds at their par value of $1,000 one year ago. Today,

the market interest rate on these bonds is 5.5%. What is the current price of the bonds, given that they now have 19 years to maturity? $1,113.48 $1,142.03 $1,171.32 $1,201.35 $1,232.15
Business
1 answer:
Aleks04 [339]3 years ago
6 0

Answer:

correct option is e.  $1,232.15

Explanation:

given data

Future value = $1,000

Rate of interest = 5.5%

NPER = 19 years

annual coupon bonds = 7.5%

solution

We will use here Present value formula for get current price of the bonds.

so  here PMT is

PMT = Future value  × annual coupon bonds   ................1

put here value

PMT = $1,000 × 7.5%

PMT = $75

The formula we use in excel =  -PV(Rate,NPER,PMT,FV,type)

so we will get here

after solving we get current price of the bond is $1,232.15

correct option is e.  $1,232.15

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3 years ago
Lagoon has two food stores Buck's and Combo's. It costs $1 to make one of Buck's bread loaves and $2 to make one of Combo's chee
Alex Ar [27]

Answer:

a. Complements

b. X(P_1,P_2) =-P_1^2-P_2^2-P_1P_2+16P_1+21.5P_2-52

Explanation:

a. Analyzing the demand equations for both products, a negative relationship between demand and price can be observed for both goods. This means that an increase in price for the cheese rounds causes a decrease in demand for bread, while an increase in price for bread causes a decrease in demand for cheese rounds. This relationship is exhibited when goods are complements.

b. The profit from each store is given by:

X_1 = Q_1*(P_1-\$1)\\X_2 = Q_2*(P_1-\$2)

Total profit is given by:

X_1 =(14-P_1 - 0.5P_2)*(P_1-\$1)\\X_1=14P_1-P_1^2 - 0.5P_1P_2-14+P_1 + 0.5P_2\\X_2 = (19 - 0.5P_1 - P_2)*(P_2-\$2)\\X_2=19P_2-0.5P_1P_2-P_2^2-38+P_1+2P_2\\X(P_1,P_2) =X_1+X_2\\X(P_1,P_2) =-P_1^2-P_2^2-P_1P_2+16P_1+21.5P_2-52

7 0
3 years ago
Increased access to workplace tools and information means work hours may be more
Gennadij [26K]

Answer:

A. Flexible is the correct answer.

Explanation:

5 0
3 years ago
A bank reconciliation revealed cash per the bank statement of $1,484, cash per company records of $1,681, bank charges of $11, d
kotegsom [21]

Answer:

Correct cash balance is $  1,580

Explanation:

Balance as per cash book                                                    $ 1,681

Less: Bank charges                                                               $ (    11)  

Less: NSF cheques                                                                <u>$ (   90)</u>

Adjusted balance per cash book                                         <u> $ 1,580</u>

Balance per bank statement                                                  $ 1,484

Add: Deposits in transit                                                          $    317

Less; Outstanding checks                                                      <u>$ (  221)</u>

Adjusted balance per bank statement                                <u>$ 1,580</u>

4 0
3 years ago
what is the present value of a deferred perpetuity that pays $141 annually with the first payment occurring at year 5? assume th
yKpoI14uk [10]

The present value of a deferred perpetuity is $1,938.89.

What is present value?
The present value of a prospective sum of money or cash flow stream given a specified return rate is known as its present value (PV). The present value of future cash flows is reduced by the discount rate, and the higher coupon rate, the lower the present value of future cash flows. The key to correctly valuing future cash flows, whether they are earnings or debt obligations, is determining the appropriate discount rate. The concept of present value states that a quantity of funds today is worth greater than the same amount in the long term. In other words, money gained in the long term is not as valuable as money received today.

The present value of a deferred perpetuity that pays $141 annually with the first payment occurring at year 5 is $1,938.89. This can be calculated by taking the present value of an ordinary annuity formula, which is PV = A / (1 + r)^n, and adding 5 to n. This gives the equation PV = A / (1 + r)^(n + 5), which can be simplified to PV = A / (1 + r)^n * (1 + r)^5. Thus, the present value is $141 / (1 + 0.06)^10 * (1 + 0.06)^5, which equals $1,938.89.

To learn more about present value
brainly.com/question/20813161
#SPJ4

3 0
1 year ago
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