1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
kakasveta [241]
2 years ago
8

A 27-year U.S. Treasury bond with a face value of $1,000 pays a coupon of 6.00% (3.000% of face value every six months). The rep

orted yield to maturity is 5.6% (a six-month discount rate of 5.6/2 = 2.8%).a. What is the present value of the bond? Present value $ b. If the yield to maturity changes to 1%, what will be the present value? Present value $ c. If the yield to maturity changes to 8%, what will be the present value? Present value $ d. If the yield to maturity changes to 15%, what will be the present value? Present value $
Business
1 answer:
nikdorinn [45]2 years ago
4 0

Answer:

(A) $1,055.35  (B) $2,180.53  (C) $780.07  (D) $412.08.

Explanation:

The tenor of the bond is 27 years i.e. (27 * 2=) 54 periods of 6 months each (n).

Face Value (F) = $1,000

Coupon (C) = 6% annually = 3% semi annually = (3% * 1000 face value) = $30.

The Present Value (PV) of the Bond is computed as follows.

PV of recurring coupon payments + PV of face value at maturity

= \frac{C(1-(1+r)^{-n}) }{r} + \frac{F}{(1+r)^{n}}

A) Yield = 5.6% annually = 2.8% semi annually.

PV = \frac{30(1-(1.028)^{-54}) }{0.028} + \frac{1,000}{(1.028)^{54}}

= 830.25 + 225.10

= $1,055.35.

B) Yield = 1% annually = 0.5% semi annually.

PV = \frac{30(1-(1.005)^{-54}) }{0.005} + \frac{1,000}{(1.005)^{54}}

= 1,416.64 + 763.89

= $2,180.53.

C) Yield = 8% annually = 4% semi annually.

PV = \frac{30(1-(1.04)^{-54}) }{0.04} + \frac{1,000}{(1.04)^{54}}

= 659.79 + 120.28

= $780.07.

D) Yield = 15% annually = 7.5% semi annually.

PV = \frac{30(1-(1.075)^{-54}) }{0.075} + \frac{1,000}{(1.075)^{54}}

= 391.95 + 20.13

= $412.08.

You might be interested in
Interest rates can be measured more accurately and quickly than reserve aggregates; hence an interest rate is preferred to the r
7nadin3 [17]

Answer:

False

Explanation:

This is false.

In reporting reserves aggregate there are lags interest rate such as the federal interest rate are quite easy to measure and easily observable. Such short term interest rate are nominal values and they do not measure the real cost of borrowing well. It does not show accurately what happens to Gross domestic product. Real interest rate equals nominal interest rate as a ratio of reduced inflation gives a representation of true cost of borrowing.

We cannot say with certainty that interests rate is a better policy instrument based on the ground of measurability.

7 0
3 years ago
In its first month of operations, Cheyenne Corp. made three purchases of merchandise in the following sequence: (1) 185 units at
Dimas [21]

Answer:

a.  $1,375

b. $1,240

Explanation:

FIFO method

FIFO assumes that the inventory to arrive first will be sold first. Inventory values depend on  earlier purchases

Inventory =  185 x $5 + 75 x $6

                = $1,375

LIFO method

LIFO assumes that the inventory to arrive last will be sold first. Inventory values depend on recent purchases

Inventory =  130 x $7 + 55 x $6

                = $1,240

7 0
3 years ago
Presented below is information for Ivanhoe Co. for the month of January 2022. Cost of goods sold $221,000 Rent expense $33,500 F
zhenek [66]

Answer:

Sales Revenues   392,500

Sales Returns        (20,000)

Freight outs     <u>         (9,700)   </u>

Net Sales              362,800‬

Cost of good sold (221,000)

Gross profit             141,800

Operating Expenses

Rent expense                          (33,500)

nsurance expense                   (14,600)

Salaries and wages expense<u> (63,400)  </u>

Operating Income                    30,300‬

Income tax expense                  (4,300)

Net Income                                26,000

Other comprehensive income    2,000

Comprehensive Income           28,000

Explanation:

the OCI is listed after-taxed thus do not change the total income tax expense

comprehensive income will be the sum of both concepts net income and OCI

3 0
3 years ago
The following production data were taken from the records of the Finishing Department for July:
SashulF [63]

Answer:

c. 37,000 units

Explanation:

Calculation to Determine the total equivalent units for direct materials, assuming that the first-in, first-out method is used to cost inventories

Using this formula

Total equivalent units for direct materials= Transferred to finished goods during the month of July + Ending work in process during the month of July - Inventory in process as on July 1

Let plug in the formula

Total equivalent units for direct materials= 37,500 units + 3,500 units - 4,000 units

Total equivalent units for direct materials= 41,000 units - 4,000 units

Total equivalent units for direct materials= 37,000 units

Therefore the total equivalent units for direct materials, assuming that the first-in, first-out method is used to cost inventories is 37,000 units

7 0
2 years ago
Bill is creating a flowchart to simulate a simple game of picking between two cards. In which box will he place the sentence "Wh
ra1l [238]

He will place this question in a box that that is under each card color. So say the two colors are red and blue, he will put this question in a box under both colors to have others ask themselves which color it is.

5 0
3 years ago
Other questions:
  • Assume that atlanta co. is producing motorcycles and selling them to u.s. customers. atlanta co. obtains all of its supplies fro
    9·1 answer
  • his information relates to Sunland Company for the year 2022. Retained earnings, January 1, 2022 $77,700 Advertising expense 2,0
    15·1 answer
  • Your client doesn’t want to pay a monthly fee for their QuickBooks Payments merchant account. What other option is available to
    12·2 answers
  • A​ company's production department was experiencing a high defect rate on the assembly​ line, which was slowing down production
    7·1 answer
  • More and more businesses have integrated social media into every aspect of their communication strategies and there are many rec
    12·1 answer
  • The Hi-Stakes Company has a number of importing and exporting transactions. Importing activities result in payables and exportin
    14·1 answer
  • When evaluating an investment, the MNC should consider the ____________ cash flows generated by the project.
    7·1 answer
  • Culver Company is involved in four separate industries. The following information is available for each of the four industries.
    8·1 answer
  • What is the current price of a $1,000 par value bond maturing in 12 years with a coupon rate of 14 percent, paid semiannually, t
    11·1 answer
  • Traders and investors trading in a forward transactions market are most concerned about:________
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!