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MrMuchimi
2 years ago
7

Madsen Motors's bonds have 18 years remaining to maturity. Interest is paid annually, they have a $1,000 par value, the coupon i

nterest rate is 7%, and the yield to maturity is 8%. What is the bond's current market price? Round your answer to the nearest cent.
Business
1 answer:
ivolga24 [154]2 years ago
6 0

Answer:

$906.30

Explanation:

Face value (FV) = $1000

Coupon payment (C) = 7% of $1000 = $70

Yield to maturity (r) = 8% = 0.08

t = 18

Number of compounding periods (n) = 1 (annually)

Using the relation:

C[( 1 - (1 + r/n)^-nt) / (r/n)] + FV / (1 + r/n)^nt

70[(1 - (1 + 0.08)^-1*18) / (0.08/1)] + 1000 / (1 + 0.08/1)^1*18

70[1 - (1.08)^-18) / 0.08] + 1000 / 1.08^18

70[(1 - 0.2502490)/0.08] + (1000 / 3.99601949918)

70(9.3718871) + 250.24902

= $906.281117

= $906.30

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A company with excess capacity must decide between scrapping or reworking units that do not pass inspection. The company has 19,
ANTONII [103]

Answer:

Incremental income as scrap=$66,500

Incremental income when re-worked= $81,700

Explanation:

Unit contribution from selling as scrap is the equal to the scrap value = 3.50

Unit contribution when reworked and sold as scrap =Selling price - cost of re-work= $8.90-4.60= $4.3

Incremental income as scrap = $3.50×19,000= $66,500

Incremental income when re-worked= $4.3 × 19,000 = $81,700

Incremental income as scrap=$66,500

Incremental income when re-worked= $81,700

5 0
3 years ago
When there is high unemployment,
Komok [63]

When there is high unemployment, A. There is a greater reliance on government assistance occurs in society.

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The totality of social relationships amongst prepared organizations of people or animals. a system of human businesses generating exceptional cultural styles and establishments and usually presenting protection, protection, continuity, and a countrywide identity for its contributors.

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4 0
1 year ago
The equipment necessary for a 4 year project will cost $3,300,000 and can be sold for $650,000 at the end of the project. The as
Allisa [31]

Answer: $618,096

Explanation:

Accumulated depreciation after 5 years = 20% + 32% + 19.2% + 11.52

= 82.72%

Value after 4 years = 3,300,000 * ( 1 - 82.72%)

= $570,240

Gain on sale = Salvage value - Net book value

= 650,000 - 570,240

= $79,760

Aftertax salvage value = 650,000 - (Gain on sale * tax)

= 650,000 - (79,760 * 40%)

= $618,096

6 0
3 years ago
Due to impending labor strife over planned layoffs in its Silicon Valley headquarters, a social networking company has decided t
Ivanshal [37]

Answer:

putting a halt on the layoffs

Explanation:

This strategy should begin by putting a halt on the layoffs. This should be top priority since the layoffs themselves are the main cause for the criticism that the company is receiving and this criticism is the sole reason as to why its market position and staff productivity has fallen drastically. People think the company is failing and the staff is scared that they will eventually be fired. By stopping layoffs and waiting for a market recovery you give other better options a chance to arise and more efficient strategies to take effect.

6 0
3 years ago
Which of these is a recurring cost of car ownership
Nastasia [14]

Answer:

Vehicle registration

Explanation:

Vehicle registration reoccurs annually, the other costs are one time.

3 0
3 years ago
Read 2 more answers
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