Which of the following application models is more likely to be suitable for a large company with a number of existing virtualize
1 answer:
You might be interested in
Answer:
It will issue 34,407 bonds
Explanation:
The Original Issue Discount state that the interest are accrued during the life of the bond and included in the face value.
This means in 25 years, it will receive 1,000 dollars, how much will it pay for that now ?
we have to find the present value which makes the YTM equal to 10%
where m are the times it compound per year
in this case a semiannualy rate is compounding 2 times per year
the rate will be 0,10 percent
the face value will be 1,000
and time equal to 25 years
If it needs to raise 3,000,000 It will issue:
3,000,000/87.20 = 34406.669 = 34,407 OID bonds
Answer:
The annual bond rate of interest = 9.8%
Explanation:
<u>A</u> denotes the annual coupon:
750.08 = A(P/A, 16%, 7) + (⁷
Annuity factor at 16% at 7 years = 4.039 (By cumulative present value table)
750.08 = 4.039 A + 353.83
4.039 A = 396.25
A = (396.25 ÷ 4.039)
A = 98.11
<u>Calculating annual bond rate:</u>
r = (98.11 ÷ 1,000) × 100
r = 9.811%
The annual bond rate being rounded off is 9.8% (answer).