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Temka [501]
3 years ago
14

A company wishes to raise $27 million by issuing 15-year semi-annual coupon bonds with face value of $1,000 and coupon rate of 6

.60 percent. The bonds will have a yield to maturity of 7.70 percent. Determine the minimum number of these bonds the company needs to issue to raise the desired amount of money.
Business
1 answer:
Evgen [1.6K]3 years ago
3 0

Answer:

We first need to find out the present value of each $1,000 bond and then we can figure out how many of these bonds we require to raise $27 million

The n of payments is 15*2 because semi annual payments for 15 years so our N will be 30

The YTM is 7.70/2 because of semi annual payments = 3.85

The Face value is of 1,000 so FV= 1,000

The payments our 1000*0.066=66 divided by 2 because semi annual payments so PMT= 33

We will put these values in a financial calculator to compute the PV of a $1000 bond.

PV= 903

So now we know that the company can get $903 for each $1,000 bond as the bonds present value is 903.

Now in order to find out how many bonds need to be issued to raise 27 million we will divide 27 million by 903, as 903 is the amount we can raise by issuing a single bond.

27,000,000/903=29,900.3 so 29,901

The company will have to issue 29,901 bonds of face value $1,000 to raise $27 million

Explanation:

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4 0
3 years ago
Melissa owns the following portfolio of stocks. What is the return on her portfolio? Stock Amount Invested Return A $8.000 17.5%
s344n2d4d5 [400]

Answer:

The option c is a right answer.

Explanation:

For calculating the return on her portfolio, the steps is to be followed which is shown below:

Step 1: First compute the weight-age of each portfolio.

Step 2: Multiply the weight-age amount to invested return.

Step 3: After multiply the amounts, the expected return comes.

Mathematically,

Step 1:  Weight-age is to be computed by

= Each Portfolio amount  ÷ total stock amount

where total stock amount = $8,000 + $4,000 +$12,000

                                           =$24,000

For A = $8,000 ÷ $24,000 = 0.3333

For B = $4000 ÷ $24,000 = 0.1666

For C = $12000 ÷ $24,000 = 0.50

Step 2:

Expected Return for A = Weight-age × invested return

                                      = 0.3333 × 17.5%

                                      = 5.83%

Expected Return for B  = Weight-age × invested return

                                      =  0.1666 × 11.0%

                                      = 1.83%

Expected Return for C = Weight-age × invested return

                                      = 0.50 × 4.30%

                                      = 2.15%

So, the total return on her portfolio is a sum of Expected Return for A + Expected Return for B +Expected Return for C

=  5.83% + 1.83% + 2.15%

= 9.81 %

Hence, the return on her portfolio is 9.81% .

Therefore, the option c is a right answer

5 0
3 years ago
Giannitti Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the u
stich3 [128]

Answer:

$30.39 per machine hour

Explanation:

Giannitti corporation has an estimated machine hours of 36,000

The estimated variable manufacturing overhead is $3.01 per machine hour

The estimated total fixed manufacturing overhead is $1,058,040

The first step is to calculate the the predetermined overhead rate

= 36,000 + 3.01 + 1,058,040

= $1,094,043.01

Therefore the predetermined overhead rate can be calculated as follows

= 1,094,043.01/36,000

= $30.39 per machine hour

Hence the predetermined overhead rate for the recently completed year is closest to $30.39 per machine hour

5 0
3 years ago
In its static budget, Hat Trick Manufacturing budgeted sales of 75,000 units at a price of $85 per unit. Its actual sales revenu
Delicious77 [7]

Answer:

C : $6,375,000

Explanation:

The static budget revenue is the revenue resulting of the predicted sales volume selling at the predicted price per unit.

In this case, Hat Trick Manufacturing expected to sell 75,000 units at a price of $85 per unit.

The company's static budget is:

SB = 75,000*\$85\\SB=\$6,375,000

The answer is C : $6,375,000.

4 0
3 years ago
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nadezda [96]

Answer:

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Explanation:

Hope this helps!

8 0
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