Answer:
a. The price of the 4-year bond if its yield increases to 7.40%: $966.43
b. The price of the 8-year bond if its yield increases to 7.40%: $941.20
Explanation:
The price of the bond will be equal to the present value discounted at yield to maturity of all the cash flows generating by the bonds including annual coupon payments and face value repayment at the maturity.
a.
4-year bond has the cash flow as followed: 4 annual coupon repayments, $64 each and face value repayment of 1,000 at maturity.
=> Price of the bond = (64/0.074) x [ 1 - 1.074^-4 ] + 1,000/1.074^4 = $966.43
b.
8-year bond has the cash flow as followed: 8 annual coupon repayments, $64 each and face value repayment of 1,000 at maturity.
=> Price of the bond = (64/0.074) x [ 1 - 1.074^-8 ] + 1,000/1.074^8 = $941.20
Answer:
D.
Explanation:
It would be best to consult an expert. If you just research the customs on your own you could find something inaccurate on the internet.
Answer:
The answer is B. 8.4%
Explanation:
To solve this, we will use Capital Asset Pricing Model(CAPM)
Stock’s annual expected return=
Rf + beta(Rm-Rf)
Rf is the risk free rate
Risk premium is (Rm-Rf) - the difference between market interest rate and the risk free rate.
Rf is 3.7%
Risk premium is 5.6%
Beta is 0.84
3.7% + 0.84(5.6%)
3.7% + 4.7%
= 8.4%
Answer:
$1,875,000
Explanation:
Break even point in sales = Fixed cost / Contribution margin ratio
When Contribution margin ratio = 100% - Variable cost ratio
Contribution margin ratio = 100% - 60%
Contribution margin ratio = 40%
Break even point in sales = $750,000 / 40%
= $1,875,000
Answer:
having to make a down payment..