Answer:
$110.00
Explanation:
Nandina Corporation
The amount of amortization expenses for 2018
State fees for incorporation $800
Legal and accounting fees incident to organization 1,500
Temporary directors’ fees 1,000
Total $3,300
Hence:
$3,300/180 months x 6 months
= $110.00
Therefore the amount of its amortization expense for 2018 will be $110.00
Answer:
False.
Explanation:
A call provision is a stipulation on the contract of a bond that allows the issuer to repurchase and retire debt security. A bind indenture states circumstances that can trigger a call, for example if underlying asset gets to a preset price.
In the question it stated that the bond holder can demand for a call. This is untrue as only the issuer has the right to request a call.
If the bondholder wants to dispose of his shares he will do so through the secondary market and not by requesting a call.
Answer:
Correct option is (C)
Explanation:
Given:
Face value of bond (FV) = $1,000
Coupon rate = 6.2% annual and 6.2 / 2 = 3.1% semi annual
Coupon payment (pmt) = 0.031 × 1,000 = $31
Maturity period (nper) = 8×2 = 16 periods
Rate = 8.3% annual or 8.3 / 2 = 4.15%
Present value of bond can be computed using spreadsheet function =PV(rate,nper,pmt,FV)
Present value of bond when yield is 8.3% is $878.99
If ytm increases to 8.6% annual or 8.6 / 2 = 4.3% semi annual, then present value of bond will be $863.22 (using spreadsheet function again)
It can be seen that as ytm increased from 8.3% to 8.6%, price of bond fell by $15.77 approximately (878.99 - 863.22)
Answer: Please refer to Explanation
Explanation:
1) You want to have $2 million when you are 65 which is 35 years from now. The interest rate is 5% and you need to know how much to deposit per year to get to that level. The $2 million is therefore the future value of your contributions which makes this an Annuity.
To calculate for the Annuity amount use the following formula,
FV of Annuity = Annuity ( ( (1 + i)^ n -1 )/ i )
2,000,000 = A ( ( ( 1 + 5%) ^ 35 -1 ) / 5%)
2,000,000 = A ( (1.05^35 -1 )/5%)
2,000,000 = A (90.3203074)
A = 2,000,000/90.3203074
A = $22,143
You should set aside $22,143 every year.
2) The major flaw in the calculation is the assumption that the interest rates will remain the same over the 35 years. This is almost impossible and will affect the amount that would need to be deposited every year to achieve the target. If the interest rate should increase then it will increase the amount that you are to get meaning you can get more than $2 million then you would not have to deposit as much to get to $2 million. If it decreases however, you will have to deposit more to get to the required $2 million because the amount earned in interest will not enable you to get to $2 million in that timeframe. .
