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Margarita [4]
2 years ago
14

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annua

l coupon payments. Suppose a German company issues a bond with a par value of €1,000, 20 years to maturity, and a coupon rate of 7.8 percent paid annually. If the yield to maturity is 8.9 percent, what is the current price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Business
1 answer:
CaHeK987 [17]2 years ago
7 0

Answer:

The current price of the bond would be € 898.87

Explanation:

Hi, we need to bring to present value the coupon payments and also the face value of the coupon in order to find the price of this bond, that can be done by using the following formula.

Price=\frac{Coupon((1+Yield)^{n}-1) }{Yield(1+Yield)^{n} } +\frac{FaceValue}{(1+Yield)^{n} }

Where:

Coupon = 1,000*0.078=78

Yield = 0.089 (or 8.9%)

Face Value= 1,000

n = 20 coupon payments

So, everything should look like this.

Price=\frac{78((1+0.089)^{20}-1) }{0.089(1+0.089)^{20} } +\frac{1,000}{(1+0.089)^{20} }

Price=717.13+181.74=898.87

Therefore, the price of this bond is € 898.87

Best of luck.

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If the Market Equilibrium Wage Rate is $105.00 and FC = $1500.00: A. The firm Shuts Down and hires no workers and loses $1500.00
BartSMP [9]

Answer: B. The firm hires 45 workers and earns a $1,200.00 Economic Profit

Explanation:

If the Market Equilibrium rate is $105 then the company should hire 45 workers as shown in the table.

If they did that, revenue would be $7,425

Expenses would be wages and fixed costs:

= Wages + fixed costs

= (45 workers * wage rate) + 1,500

= (45 * 105) + 1,500

= $6,225

Economic profit would be:

= 7,425 - 6,225

= $1,200

6 0
3 years ago
Pierce currently has $10,000. What was the value of his money five years ago if he has earned 5 percent interest each year?. . .
Vladimir [108]
Amount = $10000
Let us assume the principal = x
Amount of interest = 5%
Time = 5 years
Then
x (1 + i)^t = 10000
x(1 + 0.05)^5 = 10000
x(1.05)^5 = 10000
1.28x = 10000
x = 10000/1.276281
   = 7835.26
From the above deduction, it can be easily concluded that the correct option among all the options that are given in the question is the second option or option "B".
5 0
3 years ago
Read 2 more answers
Assume that the bank says Frank can have the money and would like to work with him on the type of debt that he will be incurring
IceJOKER [234]

Answer:

It is better for Frank, to go for a line of credit

Explanation:

It is better for Frank, to go for a line of credit, as this will enable him to have the lowest interest payment.  This will also help him to draw for his services and also enable him to be repaying the in small amounts so that the operations are not affected.

7 0
3 years ago
Chipper Corporation realized $1,000,000 apportionable taxable income from the sales of its products in States X and Z. Both stat
SIZIF [17.4K]

Answer:

a. $0

Explanation:

The business would not be subject to taxation in a state until nexus is established; thus the Chipper’s Apportionable income <u><em>(which means income of any class or type or any activity, that fulfils the connection or criteria described either in the "functional test" or "transactional test,”.)</em></u>  that is taxed by X equals $0

6 0
3 years ago
A company is deciding if it should design an advertising system for use on Twitter©. The first option is to skip out on designin
Vladimir79 [104]

Answer:

SYSTEM A

Explanation:

Given the following :

First option :

Skip design = No net gain or loss

System A:

Additional sales of $50,000 under good condition

Additional sales of $10,000 under bad condition

System B:

Increase sale by $20,000 under both good and bad condition

Cost of system development = $25,000

Good condition are twice as likely to occur as bad condition

Hence, we have : good, good, bad

Probability of good = 2/3 = 0.667

Probability of bad = 1/3 = 0.333

We can calculate the Expected monetary Value of the three options :

First option:

Skip design : Expected monetary Value = $0

Second option (SYSTEM A) :

Profit from good condition :

Additional sales - system cost = ($50,000 - $25,000) =$25, 000

Loss from bad condition :

($25,000 - $10,000) = - $15,000

Expected monetary value:

(0.667 * 25000) + (0.33 * - 15000)

$16675 - $4950

= $11,680

Third option (SYSTEM B) :

Additional sales - system cost

$20,000 - $25,000 = - $5,000

From the expected monetary value obtained for the three options, System A is the best option with $11,680

4 0
3 years ago
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