Mort Zuba, an automobile company, needs to pay off its loans to banks the following year. The company plans to sell its factorie
1 answer:
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Answer:
It will issue 34,407 bonds
Explanation:
The Original Issue Discount state that the interest are accrued during the life of the bond and included in the face value.
This means in 25 years, it will receive 1,000 dollars, how much will it pay for that now ?
we have to find the present value which makes the YTM equal to 10%
where m are the times it compound per year
in this case a semiannualy rate is compounding 2 times per year
the rate will be 0,10 percent
the face value will be 1,000
and time equal to 25 years
If it needs to raise 3,000,000 It will issue:
3,000,000/87.20 = 34406.669 = 34,407 OID bonds
Answer:
present value = $57.14.28
present value = $2857.13
Explanation:
given data
perpetuity value = $400
interest rate = 7% = 0.07
interest rate = 14% = 0.14
to find out
What is the present value
solution
we get her present value that is express as
present value = ............1
put here value for rate 7% and 14%
present value =
present value = $57.14.28
and
present value =
present value = $2857.13