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Semenov [28]
3 years ago
10

Suppose you consider buying a bond promising to pay you $25 one year from now and then the same amount every year through the fi

fth year (that is, you should receive a total of five coupon payments). At the time you receive your fifth payment, you will also receive the bond's face value of $5,000. Suppose the interest rate for a riskless bond is 7%. The most you would be willing to pay for this bond is $ . Give your answer to two decimals.
Business
1 answer:
Archy [21]3 years ago
6 0

Answer:

$3,667.44

Explanation:

The amount you would be willing to pay today can be determined by finding the present value of the cash flows

Present value is the sum of discounted cash flows

Present value can be calculated using a financial calculator

Cash flow each year from year 1 to 4 = $25

Cash flow in year 5 = $25 + $5000

I = 7%

Present value = $3,667.44

To find the PV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.  

3. Press compute  

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Answer:

$6,540

Explanation:

Given:

accounts receivable of $238,000

allowance for uncollectable accounts of $600 (credit)

Also, the allowance for uncollectible accounts should be 3% of accounts receivable.

Therefore the amount of the adjustment for uncollectible accounts would be

= 3% of $238,000 - $600= $(7140-600)= $6,540

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3 years ago
In communication, what is purpose?
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Answer:

C.

Explanation:

The purpose for communication is whatever the reason you would want to communicate in the first place.

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2 years ago
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Edgar Co. acquired 60% of Stendall Co. on January 1, 2013. During 2013, Edgar made several sales of inventory to Stendall. The c
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Answer:

Non-controlling interest in net income decreased would have by $6,000

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