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Oksi-84 [34.3K]
3 years ago
6

Gabriele Enterprises has bonds on the market making annual payments, with nine years to maturity, a par value of $1,000, and sel

ling for $954. At this price, the bonds yield 6.2 percent. What must the coupon rate be on the bonds

Business
1 answer:
Ulleksa [173]3 years ago
7 0

Answer:

5.52%

Explanation:

For computing the coupon rate we first have to determine the PMT by applying the PMT formula

Given that,  

Present value = $954

Future value = $1,000

Rate of interest = 6.2%

NPER = 9 years

The formula is shown below:

= PMT(Rate;NPER;-PV;FV;type)

The present value come in negative

So, after solving this, the monthly payment is $55.18

Now the coupon rate is

= $55.18 ÷ $1,000

= 5.52%

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Based on the data provided we conclude that the factory overhead is applied on the basis of direct labour hours.

Determination of Overhead rate

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Overhead rate per direct labor hour is $ 115,000/ 23,000 = $ 5 per direct labor hour

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Underapplied Overhead                                                        $(     900)

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