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Doss [256]
3 years ago
13

(Expected return calculation) "DEF" is a firm that is traded on NASDAQ. On 1/1/2014, the company issued 10,000 zero coupon bonds

. Each bond has a face value of $100 and matures on 1/1/2019. The bonds are the only debt of the company. A bond rating company estimated the total value of the DEF's assets on 1/1/2019 as follows:
Probability Value of DEF assets on 1/1/2019
0.2 2,000,000
0.3 1,750,000
0.4 1,200,000
0.1 1,000,000

Two years after the bond issue, on 1/1/2016, the bond rating agency reexamined the DEF Company and estimated the total value of the firm's assets as follows:

Probability Value of DEF assets on 1/1/2019
0.05 2,000,000
0.25 1,750,000
0.65 1,200,000
0.05 1.000.000
a. What will be the influence of the new probability distribution on the expected return on DEF bonds?
b. What will be the influence of the new estimation on the DEF stock price, assuming the cost of capital for the stock holders is 15%?
Business
1 answer:
ohaa [14]3 years ago
6 0

Answer: I not the best with math so I want to say 1,000,000

Explanation:

10,000 zero bonds at 100 face value would be about 1 million plus 15 percent is would be 150,000

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According to Hofstede's framework, a culture that scores low on ________ is characterized by individual stability and reputation
lesya692 [45]

Answer:

long-term orientation

Explanation:

According to hofstede, a culture with high long-term orientation tend to advocates for delayed gratification in the present day so they can get a bigger reward in the future.

A Culture with low long-term orientation tend to display the exact opposite behavior. They love spending resources on buying gifts, fulfilling social obligations (such as spending money to hang out rather than saving it) , and spending money to maintain social status (unnecessarily big house, expensive cars, etc)

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An investment will pay $200 at the end of each of the next 3 years, $300 at the end of Year 4, $500 at the end of Year 5, and $8
pantera1 [17]

Answer:

Present value = $1,780.20

Future value = $2,385.64

Explanation:

Years     Annual cash flows   Discount factor @5%       Present value

1              $200.00                  0.9523809524             $190.48

2             $200.00                  0.9070294785             $181.41

3             $200.00                  0.8638375985              $172.77

4             $300.00                  0.8227024748              $246.81

5             $500.00                  0.7835261665               $391.76

6             $800.00                  0.7462153966               $596.97

Present value                                                         $1,780.20

Now the future value is

Future value = Present value × (1 + interest rate)^number of years

= $1,780.20 × (1 + 0.05)^6

= $1,780.20 × 1.3400956406

= $2,385.64

8 0
3 years ago
Write a function rule for finding the amount of daily pay, p, in the following situation: A bus driver gets paid $100 each day p
adoni [48]

Answer:

See explanation section

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Amount of daily pay, P = Fixed cost (f) + Variable cost (v)

p = $200 + 0.20 × k

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