Answer:
7.32%
Explanation:
<em>The price of a bond is the present of its interest payment and the present value of redemption value (RV</em>
Present value of the Redemption Value (RV) =
FV× (1+r/2)^(-2×n)
FV- 2000, r- yield rate, r/2= 6.74%/2 = 3.37%, n-22
=2000× (1.0337)^(-2×22)
= 465.233
Present Value of the coupon payment =Price of bond - PV of RV
= (106.657% × 2000) - 465.233
= $1667.90
PV of coupon payment= A × (1-(1+r)^(-2×n)
A- semiannual coupon payment, r -yield
1667.90 = A × (1-(1.0337)^(-2*22))/0.0337
1,667.90 = A × 22.7710
A = 1,667.90/22.7710
A= 73.246
Annual coupon payment = 2× 73.246= 146.493
Annual coupon rate = coupon payment/ face value
= (146.493/2,000 )× 100
= 7.32%
Answer: B. Capital leases do not transfer ownership of the asset under the lease, but operating leases often do.
Explanation:
When using Capital Leases, the lessee will record the lease as if it were their own asset and as a result will also depreciate it. The lessee will also create a long term liability on their balance sheet for the asset.
Capital leases usually also involve a transfer of ownership to the lessee at the end of the lease term. Operating Leases on the other hand do not have these features. They are more like a rental of an asset and as such are recorded as a rental expense in the books of the lessee. The ownership remains with the lessor in an Operating Lease and the asset will be returned once the lease period is over.
Answer:
Price elasticity of demand for Adam=0
Price elasticity of demand for Barb=1
Explanation:
Price elasticity of demand = %age change in demanded QTY / %age change in demanded price
The price is not important for Adam, and he demands a fixed quantity, hence his demand curve is vertical. A perfectly vertical demand curve is can inelastic demand curve and has price elasticity =0
The quantity is not important for Barb, and he demands a fixed price, hence his demand curve is horizontal. A perfectly horizontal demand curve is has price elasticity =1
Answer:
The marginal cost of producing the 25th speedboat is 18,575.
Explanation:
Note that the given Leisure Enterprise’s total cost (TC) of producing speedboats is correctly stated as follows:
TC = 10Q^3 - 4Q^2 + 25^Q + 500 …….………….. (1)
Where Q represents the quantity of speedboats produced.
To obtain the marginal cost (MC) of producing speedboats, equation (1) is differentiated with respect to Q as follows:
MC = dTC/dQ = 30Q^2 - 8Q + 25 ………………… (2)
Finding the marginal cost (MC) of producing the 25th speedboat implies that Q = 25.
Substituting Q = 25 into equation (2), we have:
MC = (30 * 25^2) - (8 * 25) + 25 = 18,575
Therefore, the marginal cost of producing the 25th speedboat is 18,575.
Answer: Over-diversification
Explanation:
According to the given question, the Over-diversification is one of the concept in the business in which the an organization make a large number of investment of the different types of asset where the expectation of the marginal cost become high.
Greg is one of the leading company CEO and for the growth of the company he has decided for acquiring some small chemical firms for increase the productivity but the shareholder are not happy with this due to the over-diversification concept.
The over-diversification also increase the risk in the investment process but there is always high possibility of marginal benefit in the business. Therefore, Over-diversification is the correct answer.
