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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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To satisfy their economic wants, people ______ goods and services.
Taya2010 [7]

Answer: Consume.

Explanation: To satisfy their wants humans tends to consume goods and services. consumes in this sentence is used to indicate the Human purchasing power to sati their needs. And what are human needs this are what we need to survive on a daily basis mainly food, clothes and shelter. So by consuming goods and services we are satisfying our need.

3 0
3 years ago
On january​ 1, 2017​ hillop, inc. had total assets of​ $370,000. during the​ year, the company purchased new machinery worth​ $8
makvit [3.9K]
<span>asset turnover ratio is the ratio of the value of a company's sales or revenues generated relative to the value of its assets. The Asset Turnover ratio can often be used as an indicator of the efficiency with which a company is deploying its assets in generating revenue. Given that the sales is 60k and the value of the asset is 370k, the ratio is simply the sales / value of assets which is 60/(370-88).</span>
5 0
3 years ago
Queen, inc., has a total debt ratio of .32.
gulaghasi [49]

(A) Debt ratio = 0.32

Debt/(debt + equity)= 0.32

Debt = 0.32 *Debt + 0.32 *Equity

0.68* Debt = 0.32* Equity

Debt = 0.32*Equity/0.68 = 0.32/0.68 * Equity

Debt /equity ratio = (0.32/068*Equity)/Equity

Debt/Equity ratio = 0.32/0.68 = 0.47

Debt-equity ratio = 0.47 (Rounded to 2 decimals)

(B) Equity multiplier = 1 + debt -equity = 1+0.47 = 1.47

Equity multiplier = 1.47 (Rounded to 2 decimals)

4 0
3 years ago
You are set to receive an annual payment of $12,100 per year for the next 17 years. Assume the interest rate is 7 percent. How m
uranmaximum [27]

Answer:

The difference in value is worth $8,269 more in money.

Explanation:

Case 1. Payments are made at the end of each year

So here, we will use the annuity formula for computing the present value of payments that we are receiving at the end of each year.

Here

Annual Cash flow is $12,100

Interest Rate "r" is 7%

And

Number of Payments "n" will be 17

Present Value = Cash flow * [1 - 1 / (1+r)^n] / r

By putting values, we have:

Present Value = $12,100 * [1 - 1 / (1 + 7%)^17] / 7%

Present Value = $12,100 * 9.763223

Present Value = $118,135

Now

Cash 2. Payments are arising at the start of each year

Just like the case above, we will use the annuity formula for computing the present value of payments that we are receiving at the start of each year. The first payment will be at worth the same because it is received in today's price.

So

Present Value = Cash flow     +       Cash flow * [1 - 1 / (1+r)^n] / r

So by putting values, that were used in case 1, we have:

Present Value = $12,100 + $12,100 * (1 - (1/1.07)^16) / 0.07

Present Value = $12,100 + $12,100 * 9.446649

Present Value = $126,404

Difference in Present Value = PV of Case 1      -    PV of Case 2

= $126,404 - $118,135 = $8,269

The difference in value is worth $8,269 more in money.

4 0
3 years ago
Assume that Bullen issued 12,000 shares of common stock with a $5 par value and a $47 fair value for all of the outstanding shar
bogdanovich [222]

Answer:

c. $524,000 and $250,000

Explanation:

See the attached picture for detailed explanation.

3 0
3 years ago
Read 2 more answers
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