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Angelina_Jolie [31]
3 years ago
12

Tom Cruise Lines Inc. issued bonds five years ago at $1,000 per bond. These bonds had a 25-year life when issued and the annual

interest payment was then 15 percent. This return was in line with the required returns by bondholders at that point as described below:
Real Rate of Return 4%Infaltion Premium 6Risk Premium 5Total return..........15%Assume that five years later the inflation premium is only 3 percent and is appropriately refelcted in the required return (or yield to maturity) of the bonds. The bonds have 20 years remaining until maturity. Compute the new price of the bond.
Business
1 answer:
Dmitrij [34]3 years ago
4 0

<u>Solution and Explanation:</u>

Required Return after 5 year =  Real rate of return +   Inflation premium + Risk premium

Required Return after 5 year = 5+2+4

Required Return after 5 year =11%

No of year left to maturity = 25

Annual Interest payment = 15%*1000 = 150

Face value of Bond = 1000

New price of the bond = pv (rate, nper, pmt, fv)

New price of the bond = pv (11%,25,150,1000)

New price of the bond = $ 1336.87

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By eliminating the effects of price increases on GDP growth

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Which of the following accounts are normally reported as current liabilities on a classified balance sheet?
IRISSAK [1]

Answer:

d. Income Taxes Payable and Salaries Payable

Explanation:

Current liabilities are short term obligations of an entity due for repayment within a period of 12 months.

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MC Qu. 97 The standard materials cost to produce... The standard materials cost to produce 1 unit of Product R is 7 pounds of ma
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Answer:

total direct materials cost variance is $6,000 Favourable

Explanation:

first we get here Standard cost to manufacture

Standard cost to manufacture 6,000 units is = 7 × $47 × 6,000

Standard cost = $1,974,000

and

now we get here Actual cost to manufacturing

Actual cost to manufacturing 6,000 units is = 41,000 × $48

Actual cost = $1,968,000

and

now we get here Direct material cost variance that is express as

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put here value

Direct material cost variance = $1,974,000 - $1,968,000

Direct material cost variance = $6,000 Favourable

4 0
2 years ago
How do stocks and bonds differ?
SIZIF [17.4K]

Answer:

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Now remember, this is not "guaranteed" as stocks come with higher risks comparing to bonds, yet in US share market, stocks have performed well than the bonds overall. This is because stock prices fluctuate and if the company invested in is performing well, the share prices can sky rocket over a long period while in bonds you don't see this often as they are issued for a specific time and represents the debt capital.

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