Answer:
yield to maturity = 7.06%
Explanation:
yield to maturity (YTM) is calculated using the following formula:
YTM = {C + [(FV - PV) / n]} / [(FV + PV) / 2]
- FV = $2,000
- PV = $1,902.14
- C = $2,000 x 6.48% x 1/2 = $64.80
- n = 12 x 2 = 24
YTM = {64.80 + [(2,000 - 1,902.14) / 24]} / [(2,000 + 1,902.14) / 2] = (64.80 + 4.0775) / 1,951.07 = 0.0353 or 3.53% semianually or 7.06% annually
Since the bond sells at a discount, its yield to maturity will be higher than the coupon rate.
Answer: A. It has a competitive advantage in the industry
Explanation:
From the question, we are informed that the average cost of production for a bottle of water in the industry is 0.20 cents while its average price is 0.50 cents and that Water Inc. manufactures the same product for 0.10 cents while its average price is 0.40 cents.
The scenario shows that Water Inc has a competitive advantage in the industry. This is seen as the bottle of water is produced at a cheaper cost wen compared to its rivals.
Answer:
13%
Explanation:
the new cost of equity = old cost of equity + [(debt / equity) x (old cost of equity - cost of debt)]
the new cost of equity = 12%+ [(20 / 80) x (12% - 8%)] = 12% + 1% = 13%
Since we are in the MM world, taxes do not exist, therefore they are not included in the equation.
Answer:
d. $46,800
Explanation:
Operating revenues $199,700
Less:
Operating expenses <u> $111,000</u>
Operating Profit $88,700
Less:
Interest expense $9,200
Income tax expense <u>$36,000</u>
Net Income $43,500
Add:
Gain from sale <u> $3,300 </u>
Total Net Income <u>$46,800</u>
Answer and Explanation:
The Journal entry is shown below:-
1. Sales revenue Dr, $226,700
To Income revenue $226,700
(Being close accounts with credit income balances is recorded)
2. Income revenue Dr, $134,010
To Sales discount $4,410
To Cost of goods sold $129,600
(Being close accounts with debit expenses account is recorded)
