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Marina86 [1]
3 years ago
10

ReNew Corporation raises funds to build renewable energy systems by issuing 3-year bonds with a coupon rate of 6% and a face val

ue of $1,600. Assume that the market interest rate for a 3-year bond issued by a firm like ReNew is currently the same as the coupon rate. The price of each of these bonds is____ , which means that the bonds sell at ___. Suppose that the market interest rate for bonds that are similar to the ReNew bond has increased to 7%. The price of the ReNew bond changes to____ , which means that it sells at ____. Suppose that instead of rising, the market rate decreases from 6% to 4%. The new price of the bond changes to ___, which means that the bond sells at ___.
Business
1 answer:
Neko [114]3 years ago
4 0

Answer:

<em>The price of each of these bonds is </em><em><u>$1,600, </u></em><em>which means that the bonds sell at</em><em><u> par</u></em><em>. </em>

<em>Suppose that the market interest rate for bonds that are similar to the ReNew bond has increased to 7%. The price of the ReNew bond changes to </em><em><u>$1,558.00</u></em><em> , which means that it sells at </em><em><u>discount</u></em><em>. </em>

<em>Suppose that instead of rising, the market rate decreases from 6% to 4%. The new price of the bond changes to </em><em><u>$1,688.80</u></em><em>, which means that the bond sells at a </em><em><u>premium</u></em><em>.</em>

When the coupon rate and the market interest rate are the same, the price will be at par.

Interest rate increases:

Bond Price = Present value of coupon + Present value of bond price

Coupon = 6% * 1,600

= $96

Bond price = 96 * (1 - 1.07⁻³ / 0.07) + 1,600 / 1.07³

Bond price = $1,558.00

Interest rate decreases:

= 96 * (1 - 1.04⁻³ / 0.04) + 1,600 / 1.04³

= $1,688.80

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Svetradugi [14.3K]

Answer:

Ranking 10% interest rate:

1) 5 years

2) 10 years

3) 1 year

Raking 2% interest rate:

1) 10 years

2) 5 years

3) 1 year

Raking 18% interest rate:

1) 1 year

2) 5 years

3) 10 years

Explanation:

You have to apply to bring the amount of money to present value, according with the information, the formula is the next:

Present Value = Future Value/((1+ interest rate)^(n))

Where n is the number of years that you have to wait to receive the money.

You have to calculate every situation with the respective amount of time and interest rate, the result must be money. and when you get the 9 results, you have to compare every situation and chose the higher amount of money according to the interest rate, for example:

Present value = 140/ ((1+10%)^(1))=  127    

                       =  140/ ((1+10%)^(5))=   149    

                        =  140/ ((1+10%)^(5))=   135

So the answer for the first scenario with an interest rate of 10% is:  

Ranking 10% interest rate:

1) 5 years

2) 10 years

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5 0
4 years ago
Graphic Designs has 68,000 shares of cumulative preferred stock outstanding. Preferred shareholders are supposed to be paid $1.6
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Answer:

Graphic Designs

The firm will have to pay $6.40 per share next quarter.

Explanation:

a) Data and Calculations:

Number of cumulative preferred stock outstanding = 68,000

Preferred dividends per share = $1.60 per quarter

For four quarters, the preferred dividends per share = $6.40 ($1.60 * 4)

b) This will take care of the past three quarters that have accumulated and the fourth quarter.  Note that when a company wishes to pay a common stock dividend, it must pay the cumulative preferred dividends first, no matter the length of period that the dividends have accumulated.

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3 years ago
According to the textbook, in many instances an investor will first ask for a copy of a firm's ________ and will request a copy
e-lub [12.9K]

Answer:

The correct answer is executive summary

Explanation:

In business executive summary are widely used and important to help the company leaders to make decisions, an executive summary contains the compilation of the main company report, thus helping managers to understand all the information without having to read the entire document.

The executive summaries are characterized by specifying the most important proposals, problems, analyzes, and conclusions so that the business plan of the companies can be understood.

<em>I hope this information can help you.</em>

7 0
3 years ago
Match each account type with its description. Tiles basic checking account interest-bearing checking account savings account mon
antiseptic1488 [7]
Basic checking account = <span>Both does not earn interest and has a low minimum balance requirement; 
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Which two of the following are examples of a persuasive business message?
boyakko [2]

The two examples of persuasive business message are:

  • Employees can take two 30-minute breaks during an eight-hour workday.
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<h3>What are persuasive message?</h3>

Persuasive message are message sent to client in order to persuade them to buy into business idea or convince them to buy goods.

Therefore, The two examples of persuasive business message are:

  • Employees can take two 30-minute breaks during an eight-hour workday.
  • Won’t you help our company join the green movement by separating the wet and dry waste in your recycling containers?

Learn more about persuasive text below.

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