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3 years ago

Officials argue that the government needs to reduce the national debt. Which actions are most likely to accomplish this goal?

2 answers:

6 0

If o<span>fficials argue that the government needs to reduce the national debt, I believe that the actions that are most likely to accomplish this goal are to <span>increase taxation and decrease spending.
</span>If they increase taxation, more money will come into the state fund, and if they decrease spending, more money will actually stay there.</span>

Zina [86]3 years ago

5 0

Decrease taxation and spending

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Basic bond valuation Complex Systems has an outstanding issue of $1 comma 000-par-value bonds with a 16% coupon interest rate

salantis [7]

Answer:

a. Complex Systems' bond price today = $1,476.36

Explanation:

a. If bonds of similar risk are currently earning a rate of return of 9%, how much should the Complex Systems bond sell for today?

This can be calculated by adding the Present Value of Coupons and the Present Value of Par Value as follows:

<u>Calculation of Present Value of Coupons</u>

The present of coupons is calculated using the formula for calculating the present value of an ordinary annuity as follows:

Present value of coupons = C × [{1 - [1 ÷ (1 + r)]^n} ÷ r] …………………………………. (1)

Where;

C = Annual coupon amount = Par value * Coupon rate = $1,000 * 16% = $160

r = required rate of return or return of similar risk = 9%, or 0.09

n = number of years = 11

Substitute the values into equation (1) to have:

Present value of coupons = $160 × [{1 - [1 ÷ (1 + 0.09)]^11} ÷ 0.09] = $1,088.83

<u>Calculation of Present Par of Value</u>

To calculate this, we use the present value formula as follows:

Present Value of Par Value = Par value / (1 + r)^n

Since Par Value is $1000 and r and n are as already given above, we have:

Present value of Par Value = $1,000 / (1 + 0.09)^11 = $387.53

Therefore, we have:

Complex Systems' bond price today = Present value of coupons + Present value of Par Value = $1,088.83 + $387.53 = $1,476.36

b. Describe the two possible reasons why the rate on similar-risk bonds is below the coupon interest rate on the Complex Systems bond.

The following are the possible two reasons:

1. Interest may vary bust the coupon is fixed. What can cause the interest rate to vary is the bond rating by rating agency. But his will not affect the coupon rate which is fixed. When the rating is high, the interest will be low. But when the rating is low, the interest will be high. This indicates a negative relationship between the rating and the interest rate.

2. The level of demand may also influence the interest rate to change. When the demand is high, the interest will be low. But when the demand is low, the interest will be high. This also indicates a negative relationship between the demand and the interest rate.

c. If the required return were at 16% instead of 9%, what would the current value of Complex Systems' bond be? Contrast this finding with your findings in part a and discuss.

To do this, we simply change he required return to 16% (or 0.16) in part a and proceed as follows:

Present value of coupons at 16% = $160 × [{1 - [1 ÷ (1 + 0.16)]^11} ÷ 0.016] = $804.58

Present value of Par Value at 16% = $1,000 / (1 + 0.16)^11 = $195.42

Complex Systems' bond price today at 16% = $804.58 + $195.42 = $1,000.00

Comparing part c result with part a result shows that if the coupon rate is greater than the required rate of return, the bond is sold at a premium. That is, price of bond will be more than par. As it can be seen in part a, the price of bond is $1,476.36 when the coupon rate of 16% is greater than the required return of 9%.

Also, the bond will be sold at par when the coupon rate and require return are equal. This is shown in part c where the bond is sold at $1,000 when both coupon rate and required return rate are equal to 16%.

By implication, we can also infer without doing any calculation that the bond will be sold at a discount if the coupon rate is less than the required rate of return.

7 0

3 years ago

The vice president for BakerStone comes to you for help with sharing and supporting the new changes. Explain how she can use con

anygoal [31]

The use of continuous communication, can promote the BakerStone mission statement because one can Communicate vital information to keep stakeholders always aware of BakerStone policies as well as actions.

<h3>How can the use of modeling promote the BakerStone mission statement?</h3>

The use of modeling can promote the BakerStone mission statement as all their effort as well as input will be channeled towards achieving their mission statement.

Hence, The use of continuous communication, can promote the BakerStone mission statement because one can Communicate vital information to keep stakeholders always aware of BakerStone policies as well as actions.

Learn more about communication from

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1 year ago

Income statement _______ Click on an event in any transaction report b. Balance sheet _______ Click an account on any report c.

goblinko [34]

Answer and Explanation:

a Income statement = Reports revenues and expenses

The income statement only records the revenues earned and expenses incurred

b Balance sheet = Reports Assets, liabilities and Equities

The balance sheet records the 3 items i.e assets, liabilities and stockholder equity

With the help of the accounting equation, the balance sheet should be matched

c Statement of Cash flows = Includes operating, Investing & Financing

The cash flow statement consist of operating activities, investing activities, and financing activities. It records only cash payments and cash receipts transactions

d AR Aging Report= Reflects unpaid invoices for current period

It shows the invoices which are not paid

e AP Aging Report = Reflect unpaid bills for current period

It shows the bills which are not paid

f Inventory valuation report = Reports Inventory Quantities on hand

It shows the quantities of inventory remains on till date

g Profit and loss report = Another name for Income statement

The other name of income statement is profit and loss account or report

h To view a transaction report = Click an account on any report

For seeing the transaction report we have to just click on any report

i To view a source document = Click on an event in any transaction report

For seeing the source document we have to just click on the event of any transaction report

j % of income check box = Click to add a new column in a report

For percentage of income check box we need to add a new column in a report

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2 years ago

Why did you leave savannah

Alchen [17]

Answer:

Explanation:

Who’s she ?

7 0

3 years ago

Read 2 more answers

The Garden Company began the accounting period with a $46,000 credit balance in its Accounts Payable account. During the account

pishuonlain [190]

Answer:

the cash outflow for expenses is $106,000

Explanation:

The computation of the cash outflow for expenses is shown below:

Beginning balance $46,000

add; expenses $125,000

less; ending balance -$65,000

Cash outflow for expenses $106,000

Hence, the cash outflow for expenses is $106,000

3 0

2 years ago