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RideAnS [48]
3 years ago
8

Several years ago, Castles in the Sand Inc. issued bonds at face value of $1,000 at a yield to maturity of 6.2%. Now, with 6 yea

rs left until the maturity of the bonds, the company has run into hard times and the yield to maturity on the bonds has increased to 15%. What is the price of the bond now
Business
1 answer:
lyudmila [28]3 years ago
8 0

Answer:

The price of the bond is $659.64.

Explanation:

C = coupon payment = $62.00 (Par Value * Coupon Rate)

n = number of years = 6

i = market rate, or required yield = 15 = 0.15  = 0.15 /2  = 0.075

k = number of coupon payments in 1 year = 2

P = value at maturity, or par value = $1000

BOND PRICE= C/k [ 1 - ( 1 / ( 1 + i )^nk ) / i ] + [ P / ( 1 + i )^nk )]

BOND PRICE= 62/2 [ 1 - ( 1 / ( 1 + 0.075 )^6x2 ) / 0.075 ] + [ $1,000 / ( 1 + 0.075 )^6x2 )]

BOND PRICE= 31 [ 1 - ( 1 / ( 1.075 )^12 ) / 0.075 ] + [ $1,000 / ( 1.075 )^12 )]

BOND PRICE= 31 [ 1 - ( 1 / ( 1.075 )^12 ) / 0.075 ] + [ $1,000 / ( 1.075 )^12 )]

BOND PRICE= $239.79 + $419.85 = $659.64

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Read the following sentence, and determine which technique is most applicable to improve its readability.
Sunny_sXe [5.5K]

Answer:

The correct option is A. Using numbered or bulleted lists.

Explanation:

EXPLANATION

A. Using numbered or bulleted lists

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<em>Bulleted lists are used to make items stand out from the text without implying order of importance. They may include punctuation marks like commas and semicolons</em>

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6 0
3 years ago
Written, Inc. has outstanding 600,000 shares of $2 par common stock and 120,000 shares of no-par 8% preferred stock with a state
Vitek1552 [10]

Answer:

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Explanation:

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or

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Since,

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6 0
3 years ago
Assume again that the cost of capital is 7 percent and the effective tax rate is 40 percent. How would the payback, internal rat
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Answer:

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4 0
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