Answer: 12%
Explanation:
A coupon payment on a bond is simply the annual interest payment which the bondholder will get from the bond's issue date till the bond matures. It should be noted that coupons are described in their coupon rate, and this is calculated when one adds the sum of the coupons that are paid per year and then divide it by the face value to f the bond.
Im this case, we are told that Kaiser Industries has bonds on the market making annual payments, with 14 years to maturity, and selling for $1,382.01 and that at this price, the bonds yield 7.5 percent.
Using Excel, the coupon payment will be $120. The coupon rate will now be:
= Coupon payment/Face value
= 120/1000
= 0.12
= 12%
Therefore, the coupon rate is 12%
Answer:
It is profitable to accept the special offer.
Explanation:
Giving the following information:
The shopping mall would like to purchase 200 extra-large white trees. Apex Company has the excess capacity to handle this special order. The shopping mall has offered to pay $120 for each tree.
Variable costs:
Direct materials $50.00
Direct labor (variable) $3.50
Variable manufacturing overhead $1.00
Additional variable cost= $6
This special order would require an investment of $10,000 for the molds required for the extra-large trees.
Because it is a special offer and there is unused capacity, we will not have into account the fixed costs (except the incremental fixed cost).
Unitary variable cost= 50 + 3.5 + 1 + 6= $60.5
Fixed costs= 10,000
Incremental income= (200*120) - (200*60.5) - 10,000= $1,900
It is profitable to accept the special offer.
Answer and Explanation:
The computation of the total incremental cost is shown below;
For making 53,500 units
<u>Particulars Relevant Relevant Total </u>
<u> Per Unit Fixed Costs Relevant Costs
</u>
Variable Cost
Per Unit $2.95 $157,825
(53,500 units × $2.95)
Fixed
Manufacturing
Costs $67,000 $67,000
Total Incremental Costs to Make $224,825
For making 53,500 units
<u>Particulars Relevant Relevant Total </u>
<u> Per Unit Fixed Costs Relevant Costs
</u>
Purchase
Price
Per Unit $3.50 $187,250
(53,500 units × $3.50)
Total Incremental Cost to Buy $187,250
The company should buy the component from the outside supplier as it saves the cost for ($224,825 - $187,250) = $37,575 plus the buying cost is less than the making cost
Answer: discounted cash flow valuation
Explanation:
The discounted cash flow valuation is a method of project analysis that is defined as computing the value of a project based on the present value of the project based on the present value of the project's anticipated cash flows.
Discounted cash flow is used to determine an investment's value based on the future cash flows that the investment will bring.
