Barnes Enterprises has bonds on the market making annual payments, with 14 years to maturity, a par value of $1,000, and a price
of $958. At this price, the bonds yield 8.9 percent. What must the coupon rate be on the bonds
1 answer:
Answer:
8.36%
Explanation:
To find out the coupon rate, first we have to determine the PMT which is shown in the attachment below:
Given that,
Present value = $958
Future value = $1,000
Rate of interest = 8.9%
NPER = 14 years
The formula is shown below:
= PMT(Rate;NPER;-PV;FV;type)
The present value come in negative
So, after solving this, the yearly payment is $83.64
Now the coupon rate is
= $83.64 ÷ $1,000
= 8.36%
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Answer:
So option (b) is correct option
Explanation:
We have given value of operation PV = $25.00
WACC, that is = 11.50% = 0.1150
It is grow at a constant rat of 7 % so g = 0.07
We have to find the value of
We know that value of operation is given by
So
So option (b) is correct option