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oksano4ka [1.4K]
3 years ago
15

Advise the Sampsons on the maturity to select when investing their savings for their children’s education. Describe anyadvantage

s or disadvantages of the relatively short-term maturities versus the longer-term maturities.
Business
1 answer:
frosja888 [35]3 years ago
3 0

Answer:

I'll advise the Simpson's based on when the children are going to school.

Explanation:

short term bonds is a bond with low yields and low risks, while long term bonds offer higher yields coupled greater risk and price fluctuations.

When investing maturities for their children, I'll advise the Simpsons to take into consideration when the children will commence school. If the children are starting school in few years maybe a year or two years, a short term maturity is essential but if one wants to save for his children who are still very young and intends saving for their higher education which might be ten years later, the long term maturity is advised as it will bring about more return.

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Cost of Debt KatyDid Clothes has a $150 million (face value) 30-year bond issue selling for 104 percent of par that carries a co
Ivahew [28]

Answer:

the annual pre-tax cost of debt is 10.56%

Explanation:

the beore-tax component cost of debt will be the actual market rate of the bonds, as they offer an interest rate of 11% but are selling at 104 points not at par thus, there is a difference between the rates.

We solve for the rate which makes the coupon and maturity 104

with excel or a financial calculator

PV of the coupon payment

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

C 5.500 (100 x 11%/2)

time 60 (30 years x 2 payment per year)

rate <em>0.052787474</em>

5.5 \times \frac{1-(1+0.0527874736258532)^{-60} }{0.0527874736258532} = PV\\

PV $99.4338

PV of the maturity

\frac{Maturity}{(1 + rate)^{time} } = PV  

Maturity   100.00

time   60.00

rate  <em>0.052787474</em>

\frac{100}{(1 + 0.0527874736258532)^{60} } = PV  

PV   4.57

<em><u>Adding both we should get 104 which is the amount the bonds is selling:</u></em>

PV coupon $99.4338 + PV maturity  $4.5662 = $104.0000

The rate is generated using goal seek or wiht a financial calculator.

This rate is a semiannual rate, so we multiply by 2 to get the annual cost of debt:

0.052787474 x 2 = 0.105574947

The cost of debt for the firm is 10.56%

5 0
3 years ago
Manuel Rios wishes to determine how long it will take an initial deposit of ​$13 comma 000 to double. a. If Manuel earns 9​% ann
Lorico [155]

Answer:

See Below

Explanation:

This is a problem of compound interest. The formula is:

F=P(1+r)^t

Where

F is the future value

P is the present value

r is the rate of interest

t is the time in years

P = 13,000

To double his money, that means, F = 26,000

a)

Now, r = 9% = 0.09, so time it takes:

F=P(1+r)^t\\26,000=13,000(1+0.09)^t\\2=1.09^{t}\\t=\frac{Ln(2)}{Ln(1.09)}\\t=8.04

So, its gonna take about 8.04 years to double

b)

Similarly, here we just use r = 0.06, so the calculation is:

F=P(1+r)^t\\2=1.06^t\\t=11.9

So, its gonna take about 11.9 years to double

c)

Here, the r is 11% or 0.11

So, the time it will take:

F=P(1+r)^t\\2 = 1.11^t\\t=6.6

So, it is going to take about 6.6 years to double

d)

The amount of time it takes to double his money decreases as the interest rate increases and the time increases as interest rate decreases.

8 0
3 years ago
Unit Elastic is elasticity where a change in the independent variable (usually price) generates a proportional change of the dep
elixir [45]

Answer:

The statement is true.

Explanation:

Unit elastic is described as the demand or supply curve that is perfectly responsive to the changes in the price. In other words, the demand or the quality supplied will change or vary in accordance with the same percentage as the change in price.

The curve which has elasticity of 1 will be called as unit elastic.

5 0
3 years ago
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diamong [38]

Answer:

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Explanation:

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5 0
3 years ago
Read 2 more answers
Marketing strategy involves the activities of selecting and describing one or more target markets and developing and maintaining
Nata [24]

Answer:

The statement is true

Explanation:

Marketing strategy is the strategy which is defined as all of the marketing objective as well as goals of the company combined into a one or a single comprehensive plan. It is the one which develop and create marketing mix.

It is designed in order to develop or promote the good and service so that the business could earn or make profit.

So, the statement is true as it is stating that the strategies involve selecting activities and define 1 or more target markets. Also maintain and develop the marketing mix.

4 0
3 years ago
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