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TEA [102]
3 years ago
7

The price of a bond is equal to the sum of the present values of its future payments. Suppose a certain bond pays $50 one year f

rom today and $1,050 two years from today. What is the price of the bond if the interest rate is 5 percent
Business
1 answer:
Studentka2010 [4]3 years ago
7 0

Answer:

The correct answer is $1,000.

Explanation:

According to the scenario, the given data are as follows:

For one year

Bond pay (p) = $50

Time period (t)= 1 year

Interest rate (r) = 5%.

So, Price of bond for 1st year = p ( 1 + r)^-t

By putting the value, we get

Price of bond for 1st year = $50 ( 1 + 0.05)^-1 = $47.62

For Second year

Bond pay (p) = $1,050

Time period (t)= 2 year

Interest rate (r) = 5%.

So, Price of bond for 2nd year = p ( 1 + r)^-t

By putting the value, we get

Price of bond for 2nd year = $1,050 ( 1 + 0.05)^-2 = $952.38

So, Total price of the bond = Price of bond for 1st year + Price of bond for 2nd year

= $47.62 + $952.38

= $1,000

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In order to stimulate innovation, Harlose Inc. allows its researchers to devote 2-3 hours of their normal work schedule to pursu
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Answer:

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In this case, catering for entrepreneurs is a similar concept applied within an organization that tries to foster innovations.

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Eastern europe has become successful at manufacturing automobiles and ________ products.
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Tax loopholes allow individuals and corporations to
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4 0
3 years ago
The Donaldson Furniture Company produces three types of rocking​ chairs: the​ children's model, the standard​ model, and the exe
lions [1.4K]

Answer and Explanation:

According to the scenario, computation of the given data are as follow:-

We assume that

X = No. of children

Y  = Standard type

Z = Executive type

So,

5x + 4y + 7z = 185.........(1)

3x + 2y + 5z = 115.........(2)

2x + 2y + 4z = 94

x + y + 2z = 47.........(3)

Equation (2) multiply by 2

6x + 4y + 10z = 230

From equation (1) to (2)

5x + 4y + 7z = 185

6x + 4y + 10z = 230

-x + 0 - 3z = -45

x + 3z = 45.......(4)

Equation (3) multiply by 4

4x + 4y + 8z = 188

From equation (1) to (3)

5x + 4y + 7z = 185

4x + 4y + 8z = 188

x + 0 - z = -3

- x + z = 3……(5)

From equation (5) to (4)

x + 3z = 45

-x + z = 3

4z = 48

Executive type = Z = 48 ÷ 4 = 12

Z = 12 in equation (5)

-x + 12 = 3

x = 9 (children type)

x=9, z=12 in equation 1

5x + 4y + 7z = 185

5 × 9 + 4 × y + 7 × 12=185

45 + 4 × y + 84 = 185

4y = 56 ÷ 4

Y= 14(Standard type)

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When an industry is a natural monopoly:
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Answer:

The answer is D a larger number of firms will lead to a higher average cost

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