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irga5000 [103]
3 years ago
6

consider a bond that matures in 10 years it pay9% annual coupons and $100 at maturity is the required annual rate of return on t

he bond i s 8% then the bond will sell today for

Business
1 answer:
Crazy boy [7]3 years ago
3 0

Answer:

Bond Price today = $106.71008 rounded off to $106.71

Explanation:

To calculate the price of the bond, we need to first calculate the coupon payment per period. We assume that the interest rate provided is stated in annual terms. As the bond is an annual bond, the coupon payment, number of periods and r or YTM will be,

Coupon Payment (C) = 0.09 * 100 = $9

Total periods (n)= 10

r or YTM = 8% or 0.08

The formula to calculate the price of the bonds today is attached.

Bond Price = 9 * [( 1 - (1+0.08)^-10) / 0.08]  +  100 / (1+0.08)^10

Bond Price = $106.71008 rounded off to $106.71

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Answer:

The correct answer is letter "B": The proceeds of the bond issue entirely as debt.

Explanation:

Under the U.S. General Accepted Accounting Principles (<em>GAAP</em>) the issuance costs of bonds are ignored for reporting purposes but the amount of sales revenues is recorded as debt. The amortization of the bond can be calculated using the <em>effective interest method</em> or the <em>straight-line method</em>.

6 0
3 years ago
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Answer:

Administrative

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7 0
3 years ago
For which customer relationship group should a company make continuous relationship investments to​ delight, engage,​ retain, an
pochemuha
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6 0
4 years ago
When working with text boxes and shapes, which tab contains settings for applying shadows and 3-D rotation to objects?
maxonik [38]

Answer:

B) Effects

Explanation:

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5 0
3 years ago
Where might someone in an urban forestry career work?
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Answer:

B

Explanation:

4 0
4 years ago
Read 2 more answers
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