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Marina CMI [18]
3 years ago
6

Suppose that an investor with a 5-year investment horizon is considering purchasing a 7-year 9% coupon bond selling at par. The

investor expects that he can reinvest the coupon payments at an annual interest rate of 9.4% and that at the end of the investment horizon 2-year bonds will be selling to offer a yield to maturity of 11.2%. What is the total return for this bond
Business
1 answer:
nirvana33 [79]3 years ago
3 0

Answer:

50.34%

Explanation:

initial investment = $1,000 (bond purchased at par value)

annual coupon = $1,000 x 9% = $90

period       cash flow

year 0       -$1,000

year 1        $90

year 2       $90 + ($90 x 0.094) = $98.46

year 3       $90 + ($188.46 x 0.094) = $107.71524

year 4       $90 + ($296.17524 x 0.094) = $117.84

year 5       $90 + ($414.02 x 0.094) = $128.92

at the end of year 5, the investor will have $542.94, plus he/she will still own the bond

the price of the bond at year 5 will be:

0.112 = {90 + [(1,000 - MV)/2]} / [(1,000 + MV)/2]

0.112 x [(1,000 + MV)/2] = 90 + [(1,000 - MV)/2]

0.112 x (500 + 0.5MV) = 90 + 500 - 0.5MV

56 + 0.056MV = 590 - 0.5MV

0.556MV = 534

MV = 534 / 0.556 = $960.43

the investor's total return = [($542.94 + $960.43) / $1,000] - 1 = ($1,503.37 / $1,000) - 1 = 0.50337 x 100 = 50.34%

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Bakers are much likely to supply pastries to the market if property rights are not enforced. True or false?.
In-s [12.5K]

The statement bakers are much likely to supply pastries to the market if property rights are not enforced is <u>false</u>.

<h3>What is property rights? </h3>

Property rights can be defined as the right given to person to own and use their property they way they like or wish to use it.

The statement is not true because bakers are much likely to supply their pastries to the market if property rights are enforced.

Therefore the statement bakers are much likely to supply pastries to the market if property rights are not enforced is <u>false</u>.

Learn more about property right here:brainly.com/question/913138

brainly.com/question/22370263

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6 0
2 years ago
Which part of the business plan is an analysis of your competition and the strategies you will use to earn and maintain a compet
gizmo_the_mogwai [7]

A competitive analysis.

A competitive analysis examines the strengths and weaknesses of your competition in relation you your business.

5 0
3 years ago
Post the journal entries to the​ T-accounts, using transaction dates as posting references in the ledger accounts.
umka2103 [35]

Answer:

July 1. Yardley contributed $68,000 cash to the business in exchange for common stock.

Dr cash 68,000

    Cr common stock 68,000

July 5. Paid monthly rent on medical equipment, $510.

Dr rent expense 510

    Cr cash 510

July 9. Paid $16,000 cash to purchase land to be used in operations.

Dr land 16,000

    Cr cash 16,000

July 10. Purchased office supplies on account, $1 ,600.

Dr office supplies 1,600

    Cr accounts payable 1,600

July 19. Borrowed $26,000 from the bank for business use.

Dr cash 26,000

    Cr notes payable 26,000

July 22. Paid $1,100 on account.

Dr accounts payable 1,100

    Cr cash 1,100

July 28. The business received a bill for advertising in the daily newspaper to be paid in August, $250.

Dr advertising expense 250

    Cr accounts payable 250

July 31. Revenues earned during the month included $6,300 cash and $5,300 on account.

Dr cash 6,300

Dr accounts receivable 5,300

    Cr service revenue 11,600

July 31. Paid employees' salaries $1 ,900, office rent $1 ,400, and utilities $600. Record as a compound entry.

Dr wages expense 1,900

Dr rent expense 1,400

Dr utilities expense 600

    Cr cash 3,900

July 31. The business received $1 ,340 for medical screening services to be performed next month.

Dr cash 1,340

    Cr unearned revenue 1,340

July 31. Paid cash dividends of $6,900.

Dr dividends 6,900

    Cr cash 6,900

cash

              debit                    credit

July 1      68,000

July 5                                  510

July 9                                  16,000

July 19    26,000

July 22                                1,100

July 31    6,300

July 31                                  3,900

July 31    1,340

July 31     <u>                             6,900</u>

               101,640

accounts receivable

              debit                    credit

July 31    5,300

office supplies

              debit                    credit

July 10   1,600

land

              debit                    credit

July 9     16,000

accounts payable

              debit                    credit

July 10                                1,600

July 22   1,100

July 28   <u>                            250     </u>

                                          750

unearned revenue

              debit                    credit

July 31                                1,340

notes payable

              debit                    credit

July 19                                26,000

common stock

              debit                    credit

July 1                                  68,000

service revenue

              debit                    credit

July 31                                11,600

rent expense

              debit                    credit

July 5     510

July 31    1,400

advertising expense

              debit                    credit

July 28   250

wages expense

              debit                    credit

July 31   1,900

utilities expense

              debit                    credit

July 31    600

dividends

              debit                    credit

July 31    6,900

4 0
3 years ago
While waiting in line to buy two tacos at 75 cents each and a medium drink for 80 cents, Jordan notices that the restaurant has
puteri [66]

Answer:

The correct answer is $0,20.

Explanation:

The marginal cost, at each level of concrete production, indicates the costs we incurred in carrying out said production. Basically, it is an indicator that will allow us and help to make decisions regarding the preparation and production of goods and services.

In the previous case, the cost of buying two tacos for $ 75 each plus a $ 80 bedid is as follows:  

Tacos: $ 75 * 2 = $ 1,50

Drink: $ 80

TOTAL = 2,30

For its part, the second option is priced at $ 2,50

Subtracting the results, the marginal cost is defined as follows:

$ 2,50 - $ 2,30 = $ 0,20

6 0
3 years ago
The potential gross income of a warehouse is $4,200 a month and the vacancy rate is 2 1/2%. The taxes are $3750, the monthly mai
Marrrta [24]

Answer:

$238,320

Explanation:

First we should determine the total yearly revenue:

$4,200 (monthly income) x 12 = $50,400 - 2.5% (vacancy rate) = $49,140

Now we must determine the expenses:

monthly maintenance costs = $350 x 12 = $4,200 per year

taxes = $3,750 per year

monthly reserves for replacement = $250 x 12 = $3,000 per year

management fees = $500 x 12 = $6,000 per year

quarterly landscaping fees = $600 x 4 = $2,400 per year

Total revenues                                                       $49,140

maintenance costs                                                ($4,200)

taxes                                                                       ($3,750)  

reserves for replacement                                     ($3,000)

management fees                                                 ($6,000)

<u>landscaping fees                                                   ($2,400)   </u>

net profit per year                                                 $29,790

warehouse value = $29,790 / cap rate = $29,790 / 12.5% = $238,320

5 0
3 years ago
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