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IrinaVladis [17]
3 years ago
12

Union local school district has a bond outstanding with a coupon rate of 3.3 percent paid semiannually and 20 years to maturity.

The yield to maturity on this bond is 3.7 percent, and the bond has a par value of 10000. What is the price of the bonds?

Business
1 answer:
topjm [15]3 years ago
8 0

Answer:

$9,438.22

Explanation:

For computing the price of the bond we need to apply the present value formula i.e be to shown in the attachment below:

Given that,  

Future value = $10,000

Rate of interest = 3.7%  ÷ 2 = 1.85%

NPER = 20 years  × 2 = 40 years

PMT = $10,000 × 3.3% ÷ 2 = $165

The formula is shown below:

= -PV(Rate;NPER;PMT;FV;type)

So, after applying the above formula, the price of the bond is $9,438.22

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A company manufactures various sized plastic bottles for its medicinal product. The manufacturing cost for small bottles is $67
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Answer:

The company should buy from an outside source rahter than manufacturing because each bottle manufactured costs $5 more.

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Differential Analysis

                                                          Make            Buy

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Purchasing Cost per bottle                                  $35

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<u>Fixed Costs                                                            $ 22   </u>

<u>Total                                                   $ 67              $62   </u>

<u />

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