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
Gennadij [26K]
3 years ago
9

Calculate the fair present values of the following bonds, all of which pay interest semiannually, have a face value of $1,000, h

ave 10 years remaining to maturity, and have a required rate of return of 15.5 percent.
a. The bond has a 7.2 percent coupon rate. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) Fair present value $
b. The bond has a 9.2 percent coupon rate. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) Fair present value $
c. The bond has a 15.5 percent coupon rate. (Do not round intermediate calculations.) Fair present value $
Business
1 answer:
allochka39001 [22]3 years ago
8 0

Answer:

Explanation:

A)

CR  Semi annually    7.2/2 3.6%

 

Semi Annual Cash-flow 1000*3.6%  36

 

Rate of Return          15.5 7.75%

 

Present value of bond at 7.75% semmi annually return  

Due to series of c/F apply annuity                                 1-(1+0.0775)^-20

Due to one single  c/F apply compound                        1/(1+0.0775)^20

  No of              Cash flows  Discount facto5 @ 7.75% annuity  Present Value

Cashflows                                    P=R*(1-(1+I )^-n) / i  

   20                      36                  9.966011947                        358.7764301

    1                   1000                  0.222651068                222.6510682

                                                    Present values    581.4274982

B)

CR  Semi annually    9.2/2 4.6%

 

Semi Annual Cash-flow 1000*4.6%  46

 

Rate of Return          15.5 7.75%

 

Present value of bond at 7.75% semmi annually return  

  No of              Cash flows  Discount facto5 @ 7.75% annuity  Present Value

Cashflows                                    P=R*(1-(1+I )^-n) / i  

   

    20               46                 9.966011947                        458.4365495

      1                1000           0.222651068                         222.6510682

                                  Present Value                          681.0876177

C)

There is no transaction cost and CR = IRR thats why the present value of the bond will be equal to face value of bond

CR =  15.5%

IRR = 15.5%

Present value of bond at 7.75% semmi annually return  

  No of              Cash flows  Discount facto5 @ 7.75% annuity  Present Value

Cashflows                                    P=R*(1-(1+I )^-n) / i  

  20                77.5               9.939402948                         770.3037285

   1                       1000                0.22472657                         224.7265701  

                                                                                 995.0302985

Difference is due to decimals

You might be interested in
All states withhold state income taxes. true false
weeeeeb [17]
False is the answer.
3 0
3 years ago
Why might a company invest in another​ company? A. To ensure a steady supply of raw materials if the company being purchased is
Sladkaya [172]

Answer:

The answer is D.

Explanation:

A company might invest in another company to:

1. ensure a steady supply of raw materials if the company being purchased is a supplier of those raw materials. The company might be experiencing shortages of raw materials or outrageous increase in price of the raw materials. So acquiring a supplier of this raw materials will be a good option.

2. earn interest revenue. This can be one of the objectives too.

3. earn dividend income. Investment or shareholding in companies will lead to receiving dividend from such country.

5 0
3 years ago
As a management function, organizing involves:_____.
Ainat [17]

As a management function, organizing involves:

  1. developing organization structure;
  2. designing individual jobs.

Therefore, the option D holds true.

<h3>What is the significance of management functions?</h3>

The management functions were proposed by Henry Fayol, and can be referred to or considered as the essential functions for efficient functioning of a business organization.

Organizing is the second management function. It is performed after the planning function has been accomplished successfully by the organization to develop its structures in order to designate jobs.

Therefore, the option D holds true and states regarding the significance of management functions.

Learn more about management functions here:

brainly.com/question/15351742

#SPJ1

7 0
1 year ago
A firm has three different production​ facilities, all of which produce the same product. While reviewing the​ firm's cost​ data
kakasveta [241]

Answer:

Joshua statement is correct.

Explanation:

Marginal cost:

Is the cost of producing a new unit.

Average Cost:

\frac{Fixed Cost + Variable Cost}{UnitsProduced} = $Average Cost

\frac{Fixed Cost}{UnitsProduced} + $Variable Cost Per Unit= Average Cost

If the marginal cost of this plant is lower than their other plants, it can decrease his average cost by increasing the amount produced.

This increase in production decrease the impact of the fixed cost in the unit price. At more production the average cost will decrease. Because the variable cost keeps at the same value but the fixed cost per unit decrease.

3 0
3 years ago
13.. Francisco leased equipment from Julio on December 31, 2021. The lease is a 10-year lease with annual payments of $150,000 d
tatuchka [14]

Answer:

$800,239.40

Explanation:

Calculation for the balance in Francisco lease liability at December 31, 2022

First step is to find the Liability for the year end 31st December 2021

Using this formula

Liability as on 31st December 2021=Initial Value of the Liability - Annual Payment

Let plug in the formula

31st December 2021 Liability =$1,013,854-$150,000

Liability as of 31st December 2021=$863,854

Second step is to find Interest for the Year 2022

Interest =$863,854×10%

Interest =$86,385.40

Third step is to less the interest amount from the Annual payment

Annual Payment $150,000- Interest $86,385.40

=$63,614.60

Last step is to find the balance in the lease liability at December 31, 2022

Lease liability balance = $863,854 -$63,614.60

Lease liability balance=$800,239.40

Therefore What should be the balance in Francisco lease liability at December 31, 2022 will be $800,239.40

5 0
3 years ago
Other questions:
  • A newspaper advertisement for Cashmere Closet states "This Saturday 9 a.m., 1 Red Cashmere Scarf, worth $299.95… $10.00 First Co
    5·1 answer
  • Replace an existing asset: You have a 2000 Nissan that is expected to run for another three years, but you are considering buyin
    7·1 answer
  • At the beginning of the meeting Kira does not properly lead the team during the ______ stage ofteam development. Therefore, the
    14·1 answer
  • The belief that culture is held together by a series of important elements such as economy, education, religion, kinship, and po
    10·1 answer
  • What is a formal arraignment to limit the production of a product
    7·1 answer
  • Demand for a given good is elastic, which means that the percentage change in __________ is greater than the percentage change i
    8·1 answer
  • An arithmetic cash flow gradient series equals $600 in year 1, $700 in year 2, and amounts increasing by $100 per year through y
    6·1 answer
  • A small self-service store that is open long hours and carries a narrow product assortment in convenient locations is best descr
    6·1 answer
  • Select all of the expressions that are equal to 6 × 45.<br> 6 × (40 + 5)
    13·1 answer
  • On June 1, 2018, Crane Company and Cheyenne Company merged to form Ayayai Inc. A total of 876,000 shares were issued to complete
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!