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stepan [7]
3 years ago
7

Broke Benjamin Co. has a bond outstanding that makes semiannual payments with a coupon rate of 5.2 percent. The bond sells for $

945.32 and matures in 16 years. The par value is $1,000. What is the YTM of the bond

Business
1 answer:
marin [14]3 years ago
6 0

Answer:

The correct answer is 5.72%.

Explanation:

According to the scenario, the given data are as follows:

Coupon rate = 5.2%

Coupon rate (semiannual) = 2.6%

par value (FV)= $1,000

Coupon payment(pmt) = $1,000 × 2.6% = $26

Time period = 16 years

Time period ( semi annual) (Nper)= 32

Sell value ( PV) = $945.32

So, we can calculate the rate by using financial calculator.

Attachment is attached below

So, YTM Semiannual= 0.02863 or 2.86%

And YTM annual = 2.86% × 2 = 5.72%

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If the government wants to increase production of a good to achieve marginal social benefit, then the following policy will most
Kobotan [32]

Answer:

a. a subsidy so that the firm can operate where marginal social benefit equals marginal social cost.

Explanation:

The private company is producing when the marginal revenue matches the marginal cost. The governemtn will want to decrease the cost (that's by subsidize the activity) to match the marginal revenue considering the positive externalities.

The government will do a pigouvian subsidy.

The government reasons to go for this is that the good or services provide positive externalities Which are enjoy by people who doens't purchase the good. Thus, this subsidy will increase the amount of ooutput thus, generating a better social benefit.

6 0
3 years ago
The market capitalization treasure on the stock of flex steel company is 12%. the expected ROE is 13% and the expected EPS are 3
VLD [36.1K]

Answer:

a. ROE (r) = 13% = 0.13

EPS = $3.60

Expected dividend (D1) = 50% x $3.60 = $1.80

Plowback ratio (b) = 50% = 0.50

Cost of equity (ke) = 12% = 0.12

Growth rate = r x b

Growth rate = 0.13 x 0.50 = 0.065

Po= D1/Ke-g

Po = $1.80/0.12-0.065

Po = $1.80/0.055

Po = $32.73

P/E ratio = <u>Current market price per share</u>

                  Earnings per share

P/E ratio = <u>$32.73</u>

                 $3.60

P/E ratio = 9.09        

b.  ER(S) = Rf + β(Rm - Rf)

    ER(S) = 5 + 1.2(13 - 5)

    ER(S) = 5 + 9.6

    ER(S) = 14.6%

                                                                                                                                                                                                                                                                                                                                                                                     

Explanation:

In the first part of the question, there is need to calculate the expected dividend, which is dividend pay-our ratio of 50% multiplied by earnings per share. We also need to calculate the growth rate, which is plowback ratio multiplied by ROE. Then, we will calculate the current market price, which equals expected dividend divided by the difference between return on stock (Ke) and growth rate. Finally, the price-earnings ratio is calculated as current market price per share divided by earnings per share.

In the second part of the question, Cost of equity (return on stock) is a function of risk-free rate plus beta multiplied by market risk-premium. Market risk premium is market return minus risk-free rate.

8 0
3 years ago
Consider the following statements, and indicate which variable is an independent variable and which variable is a dependent vari
Kobotan [32]

Answer and Explanation:

A. When the employees are more educated and have the higher income as compared with the less educated employees so here education would be indepedent variable and the income is dependent variable. Also the relationship between these two variables i.e. education and income is positive

Therefore the same is relevant

8 0
2 years ago
Variable Costing—Sales Exceed Production The beginning inventory is 14,500 units. All of the units that were manufactured during
blagie [28]

Answer:

a. Variable costing income from operations <u>is greater than </u>absorption costing income from operations.

b. $870,000

Explanation:

a. Under Variable costing, only the variable manufacturing costs are apportioned to the units produced.

Cost under Variable costing are;

= 114 * 14,500

= $‭1,653,000‬

Under Absorption Costing, both fixed and variable costs are apportioned to the units produced.

Cost therefore is;

= (114 + 60) * 14,500

= $‭2,523,000‬

Variable costing income from operations is greater than absorption costing income from operations because Absorption costs yields more cost.

b.= Absorption cost - Variable cost

= ‭‭2,523,000‬ - 1,653,000‬

= $870,000

<em>Variable costing income from operation will be $870,000 higher than Absorption costing income from operations.</em>

5 0
3 years ago
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