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Nataly [62]
4 years ago
15

Several years ago MMM Company borrowed money through a bond issue with the following features. Each individual bond has a $1,000

par value and a 9% annual coupon interest rate, with interest paid semi-annually (twice per year), and will mature five years from today.
What price should someone who requires an 8% annual rate of return (yield to maturity) be willing to pay for one of these bonds?
Business
1 answer:
Fynjy0 [20]4 years ago
6 0

Answer:

$1040.56

Explanation:

A bond is debt instrument issued by a borrower which promises to pay the holder regular interest for the holding period and the terminal value at the end of the period.

According to the discounted cash flow model, the value of an asset is the present value of the future cash flows arising from the assets discounted at the required rate of return.

Present value is the worth today of an amount expected in the future.The process of calculating the present value is called discounting

To calculate the price of this bond, we shall discount the future cash flows using the required return of 8% per annum, which is the same as 4% per six-month

Interest payment per 6 month = (9% × $1000)/2= $45

PV of interest payment =  45 × (1-  (1.04)^(-2×5))/0.04)= 364.995

PV of redemption value = 1000 ×  1.04^(-2× 5) =               <u>675.56</u>

Price of the bond                                                               1<u>040.56</u>

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The formula to use get the % of grand totals is as follows:

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In a spreadsheet. this refers to the rectangular area that is formed by the intersection of a column and a row.

On a typical spreadsheet, every cells have its assigned code from Combination of Number 1-10 to Alphabet A-Z.

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2 years ago
How does executive compensation can help manage interest over stockholder interest?
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1) Afew participles, such as concerning, considering, failing, and granting, function as prepositions and may be used to introdu
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Answer:

1. The Dangling Modifiers

Dangling modifiers modify a sentence but they do so without giving information as to who the subject of the action in the sentence. For example, <em>After doing her homework, Hillary went to watch TV</em>. Hillary is the subject here but the <em>After</em> does not show that.

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