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Virty [35]
3 years ago
6

Lincoln Park Co. has a bond outstanding with a coupon rate of 6.04 percent and semiannual payments. The yield to maturity is 6.1

percent and the bond matures in 15 years. What is the market price if the bond has a par value of $2,000
Business
1 answer:
Reil [10]3 years ago
3 0

Answer:

value of the bond = $2,033.33

Explanation:

We know,

Value of the bond, B_{0} = [I * \frac{1 - (1 + i)^{-n}}{i}] + \frac{FV}{(1 + i)^n}

Here,

Face value of par value, FV = $2,000

Coupon payment, I = Face value or Par value × coupon rate

Coupon payment, I = $2,000 × 6.04%

Coupon payment, I = $128

yield to maturity, i = 6.1% = 0.061

number of years, n = 15

Therefore, putting the value in the formula, we can get,

B_{0} = [128 * \frac{1 - (1 + 0.061)^{-7}}{0.061}] + [\frac{2,000}{(1 + 0.061)^7}]

or, B_{0} = [128 * \frac{1 - (1.061)^{-7}}{0.061}] + [\frac{2,000}{(1.061)^7}]

or, B_{0} = [128 * \frac{0.3393}{0.061}] + 1,321.3635

or, B_{0} = [128 * 5.5623] + 1,321.3635

or, B_{0} = $711.9738 + 1,321.3635

Therefore, value of the bond = $2,033.33

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Problem 10-3 eastman publishing company is considering publishing an electronic textbook about spreadsheet applications for busi
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We are given the following data for publishing an electronic textbook about spreadsheet applications for business.

Fixed cost  = $160,000
Variable cost = $6 per book
Selling price = $46 per book

First, we have to establish an equation to know the profit or loss of the company.

Total cost = Fixed cost + Variable Cost (number of books)
Total sales = Selling price (number of books)

The profit is calculated by subtracting the total cost from the total sales.

Profit = Total sales - total cost

The following equations are useful:

let x = number of books produced
      y = number of books sold

Total cost = $160,000 + $6x
Total sales = $46y

The value of x can be changed according to the actual number of books produced. y can be changed according to the actual number of books sold

Profit = $46y - ($160,000 + $6x)

If x = y = 3500

Profit = $22,000 for 3500 books
<span />
4 0
3 years ago
Victor Cruz contributed $77,000 in cash and land worth $144,000 to open a new business, VC Consulting, in exchange for common st
Tpy6a [65]

Option A is correct

Explanation:

The following entry will be passed by VC Consulting in the books of accounts:

<u>Particulars                Debit                  Credit </u>

Cash                           77000

Land                             144000

To common stock                              221000

Cash account and Land account will be debited in the books of account with an amount of $77000 and $144000 and common stock will be credited with an amount of $221000

Therefore, the option with this will be the correct option.

From the given option, A is the correct one.

6 0
2 years ago
Read 2 more answers
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Murrr4er [49]
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4 0
2 years ago
A company’s past experience indicates that 60% of its credit sales are collected in the month of sale, 30% in the next month, an
Naddika [18.5K]

Answer:

$213,250

Explanation:

The calculation of cash inflow is shown below:-

                    Expected cash collections

                       For the month of June

Months       Sales              Percentage     Expected collections

April           $282,500        5%                    $14,125

May            $213,750         30%                  $64,125

June           $225,000        60%                 $135,000

Total collection in the month of June        $213,250

Here we assume Sales for April$282,500, May $213,750 and June $225,000.

Please ignore the last value as it is not relevant to the question

4 0
2 years ago
A $250,000 loan is to be amortized over 8 years, with annual end-of-year payments. Which of these statements is CORRECT? a. If t
Anarel [89]

Answer:

The answer is "Option b".

Explanation:

In this scenario, the second option, which would be the percentage within each transaction that's also interest instead of the full amount, would've been lower if the rate of interest were lower because interest-related transactions would have been higher at lower rates and conversely, as opposed to the main refunds.

7 0
3 years ago
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