Answer:
A) initial outlay = $150 million
Cash flow year 1 = [($30 - $25) x 0.6] + $25 = $28
Cash flow year 2 = [($30 - $25) x 0.6] + $25 = $28
Cash flow year 3 = [($30 - $25) x 0.6] + $25 = $28
Cash flow year 4 = [($30 - $25) x 0.6] + $25 + ($25 x 60%) + $50 = $93
B) Using a financial calculator, NPV = -$16.85 million
C) cash flow year 4 should increase by $24.667 million, meaning that the selling price must increase by $$24.667/0.6 = $41.11 million
minimum selling price $25 + $41.11 = $66.11 million
Answer:
The $300 of out of pocket expense exceeds the MSRB political contribution limit and will result in the municipal securities firm being banned as an underwriter for that issuer for 2 years.
Explanation:
The municipal securities firm is is underwriter for municipal issuer. The volunteers have paid $300 out of pocket but they are not entitled to make contribution to the campaign. This will result the firm being banned for two years as an underwriter for the issuer.
Answer:
$12,000
Explanation:
The manufacturing company has a direct materials cost of $6
The company manufactures 2,000 unit
Therefore total direct material cost can be calculated as follows
= 2,000×6
= $12,000
Hence the total direct material cost of $12,000
The convexity of the bond is 61.810 and the duration of the bond is 7.330 years.
<u>Explanation</u>:
- A newly issued bond has a maturity of 10 years. It pays a 7.7% coupon rate. The coupon payments will receive each year. Using the coupon payments the year will be reduced.
- The maturity year will get reduced. So the duration of the bond is approximately 7.330 years. If the bond is sold at par value the convexity can be calculated using the number of years.
- So the convexity of the bond is 61.810.
