Answer:
a. Compute the current yield on both bonds.
Current yield = Annual coupon payment / current market price of bond
Bond A current yield = $80 / $800 = 0.1
Bond B current yield = $85 / $900 = 0.09
b. Which bond should he select based on your answer to part a?
Bond A, because it has a higher current yield.
What is the approximate yield to maturity on Bond B?
Approximate Yield to Maturity (YTM) = [C+ (F-P) / n] / [(F+P) / 2]
Where:
C = Coupon payment
F = Face value
P = Price
n = years to maturity
Because the face value is not specified in the question, we will assume is the same as the price.
Bond B YTM = [85 + (900-900) / 2] / [(900+900) / 2]
= 0.09
d. Has your answer changed between parts b and c of this question in terms of which bond to select?
Under the assumption that the price and face value of Bond b are the same, we can see that the YTM and the current yield are the same, so the choice of the bond (bond A) has not changed.
However, if the face value was higher or lower than the price, the YTM would be different to the current yield, for that reason, it is always best to check Yield to Maturity instead of current yield when choosing which bond to invest in.
Answer:
3.52
Explanation:
Calculation to determine the target cost per unit?
Using this formula
Target cost per unit=Projected sales -Desired profit /Projected units
Let plug in the formula
Target cost per unit=$300,000-$36,000/75,000 units
Target cost per unit=$264,000/75,000 units
Target cost per unit=3.52 per unit
Therefore the target cost per unit is 3.52
Answer:
resources that are valuable, rare, costly to imitate, and non-substitutable
Explanation:
If competitors can copy or match the products and services the firm offers, it will be difficult to develop a sustainable competitive advantage through product excellence. A firm can, however, develop an advantage through product excellence with resources that are valuable, rare, costly to imitate, and non-substitutable
Apart from product excellence, Intangible assets that have no physical presence like Brand reputation, trademarks and intellectual property are all intangible assets unlike physical resources, cannot buy from the market by other competitors. They are developed within a company and constitute the source of sustainable competitive advantage.
In particular, the resources that generate competitive advantage are those that possess the VRIO characteristics,which implies that they are
Valuable, hence there will be no competitive disadvantage
Rare, hence there will be no competitive parity
Imitate, - are costly and difficult to imitate hence they cannot be copied
Organised to Capture Value - which means they are non-substitutable.
Answer: $121
Explanation:
The question simply wants us to find the present value of receiving $100 investment two years from now at a 10 percent annual discount rate.
This can be easily solved as follows:
For the first year, the $100 will be worth:
= $100 + ($100 × 10%)
= $100 + ($100 × 0.1)
= $100 + $10
= $110
The worth at the end of the second year will then be:
= $110 + ($110 × 10%)
= $110 + $11
= $121