In the cell phone mini case, mobile power's money-back guarantee and warrantee are a form of _______

Two 1000 dollar face value bonds are both redeemable at par, with the first having a redemption date 3 years prior to the redemp

finlep [7]

Answer:

$ 915.71

Explanation:

In order to determine the second bond price we need to determine the number of years to maturity of the first bond using nper formula in excel.

=nper(rate,pmt.-pv,fv)

rate is the semiannual interest rate of 6% (12%*6/12)

pmt is the semiannual interest=$1000*8.3%*6/12=$41.50

pv is the current price at $813.04

fv is the face value of $1000

=nper(6%,41.50,-813.04,1000)= 16.00

The years to maturity=16/2=8 years

The years to maturity of second bond=8+3=11 years

price of second bond=-pv(rate,nper,pmt,fv)

rate is 6%

nper is 11 years multiplied by 2= 22

pmt =5.3%*$1000=$53

fv is $1000

=-pv(6%,22,53,1000)=$915.71

5 0

3 years ago

Read 2 more answers

Which of the following currencies is not/are not a hard currency?* Euro O CHF RMB O CDS GBP Both b and c Both c and d

cestrela7 [59]

Examples of some of the most prominent hard currencies are listed below: The U.S. dollar (USD) The euro (EUR) ... The Australian dollar (AUD)

6 0

3 years ago

Because of uncertainty about future inflation, the union devotes a large quantity of resources to monitoring inflation indicator

IrinaVladis [17]

Answer:

C. Variable inflation is associated with high transaction costs

Explanation:

Because of uncertainty about future inflation, it may not uncertain relative to its price change. Therefore, option A is not correct.

In order to maximize financial position, inflation harms borrowers and helps lenders, so option B is also incorrect.

Option C is correct because variable inflation is associated with high transaction costs in order to maximize the financial position. For example, if the inflation rate is 5% during first quarter, the price level is not much to disrupt the financial position. Again, in the next quarter, if the inflation rate changes to 4%, the position will be effective more. However, if it increases, it will not affect too much.

7 0

3 years ago

A corporate bond has a face value of $1,000 and a coupon rate of 9.5%. The bond matures in 12 years and has a current market pri

joja [24]

Answer:

5.71%

Explanation:

The after tax cost of debt=pretax cost of debt*(1-t)

where t is the tax rate of 35% or 0.35

pretax cost of debt=yield to maturity

The yield to maturity can be determined using rate formula in excel as below:

=rate(nper,pmt,-pv,fv)

nper is the number of coupon interest payable by the bonds i.e 12 coupons in 12 years

pmt is the annual coupon=$1000*9.5%=$95

pv is the current market price-flotation cost=$1,100-$48=$1052

fv is the face value of $1000

=rate(12,95,-1052,1000)=8.78%

After tax cost of debt=8.78% *(1-0.35)=5.71%

6 0

3 years ago

Lincoln Park Co. has a bond outstanding with a coupon rate of 5.73 percent and semiannual payments. The yield to maturity is 6.7

Natalija [7]

Answer:

Bond Price= $1,774.05

Explanation:

Giving the following information:

Coupon rate= 0.0573/2= 0.02865

YTM= 0.067/2= 0.0335

The bond matures in 23 years.

Par value= $2,000

<u>To calculate the bond price, we need to use the following formula:</u>

Bond Price= cupon*{[1 - (1+i)^-n] / i} + [face value/(1+i)^n]

Bond Price= 57.3*{[(1 - (1.0335^-46)] / 0.0335} + [2,000/1.0335^46]

Bond Price= 1,334.76 + 439.29

Bond Price= $1,774.05

5 0

3 years ago

In the cell phone mini case, mobile power's money-back guarantee and warrantee are a form of ________ pricing