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
chubhunter [2.5K]
4 years ago
7

A risk-free bond will pay you $1,000 in 2 years and nothing in between. The annual discount rate is i=27.5% compounded annually.

What is the bond's present value?
Business
1 answer:
denis23 [38]4 years ago
3 0

Answer:

$615.15

Explanation:

Since we have only one cashflow at the end of 2 years and no coupons, find present value (PV). You can use a financial calculator and input the following;

Future value ; FV = 1,000

Duration; N = 2

Interest rate; I/Y = 27.5%

Coupon payments ;PMT = 0

then compute present value; CPT PV = 615.148

Therefore, the bond's PV is $615.15

You might be interested in
Which of the following statements is CORRECT? a. Because most stock ownership is concentrated in the hands of a relatively small
lbvjy [14]

Answer:

d. The potential exists for agency conflicts between stockholders and managers.

Explanation:

  • A problem of the agency is a conflict of the interest of relationships where one party is expected to act in another best interest and usually refers to the conflicts of the interest between the companies management and the stockholders.
6 0
3 years ago
Us federal income tax is progressive by law, but which best explains why is it sometimes regressive in practice?
Solnce55 [7]
I believe the answer is: High-income earners use tax laws to their advantage to reduce their tax rates

High income earners tend to possess financial knowledge or ability to allow experts who understand the full scope of taxation laws and how to recorded the transactions in a way that make it eligible for tax deduction. This makes a lot of high income earners manage to avoid paying taxes even if they manage to obtain a lot of profit.
3 0
3 years ago
Read 2 more answers
With respect to engineering economics and the internal rate of return (IRR), Descartes’ rule of signs indicates there will be at
Alika [10]

Answer:

''there will be at most as many POSITIVE rates...''

Explanation:

The measure of investments' rate of return which excludes external factors such as inflation is known as Internal Rate of Return(IRR)

It is used in;

(1). Savings and loans.

(2). Liabilities

(3). Fixed incomes

(4). Private equity and capital management.

(5). Maximizing total present value and so on.

It can be calculate using the formula below:

NPV= C(n)/(1+r)^n = 0

That is internal rate of return can be use in solving NPV = 0.

Therefore, 'With respect to engineering economics and the internal rate of return (IRR), Descartes’ rule of signs indicates there will be at most as many POSITIVE rates of return as there are sign changes in the cash flow profile.''

4 0
4 years ago
What is the purpose of a food safety management system?
zubka84 [21]

Answer:

To control food safety hazards within a food business in order to make sure that food is safe to eat.

Explanation:

4 0
3 years ago
Every society faces​ trade-offs because we live in a world of scarcity. Suppose a​ student-athlete has the opportunity to earn ​
Leokris [45]

Answer: Opportunity cost of returning to college next year is $1,000,000.

Explanation: Opportunity cost is the cost of the next best alternative sacrificed or foregone. When the athlete chooses to join college he is sacrificing his income that could be earned from playing the game. The player has the option of playing for the minor league baseball team for $1,000,000 or for European professional football team for ​$500,000. The person thus has a choice between playing for the minor league baseball team (since it is the highest paying) or going to college. Thus the opportunity cost of going to college will be $1,000,000.

8 0
3 years ago
Read 2 more answers
Other questions:
  • Aiden is designing a blog that will allow many company employees and executives to share company news with both the general publ
    15·1 answer
  • Is CNC a type of machine?
    5·1 answer
  • Which of the following is NOT an end goal of BOTH quality improvement programs and continuous process improvement? Select one: a
    9·1 answer
  • According to the product life-cycle theory, the locus of global production initially switches from the United States to other ad
    11·1 answer
  • A country recently experienced a drop in consumer purchases and a rise in business inventories of durable goods. Wages grew slow
    13·1 answer
  • After September​ 11, 2001, the federal government increased military spending on wars in Iraq and Afghanistan. Is this increase
    14·1 answer
  • Nonprofit organizations differ from profit organizations in that nonprofit organizations: Group of answer choices
    6·1 answer
  • During December, Far West Services makes a $1,600 credit sale. The state sales tax rate is 6% and the local sales tax rate is 2.
    15·1 answer
  • Brian lives in Chicago and runs a business that sells pianos. In an average year, he receives $793,000 from selling pianos. Of t
    14·1 answer
  • Define your seven weakness and seven strengths with reason
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!