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8090 [49]
3 years ago
12

You are called in as a financial analyst to appraise the bonds of Olsen's Clothing Stores. The $1,000 par value bonds have a quo

ted annual interest rate of 10 percent, which is paid semiannually. The yield to maturity on the bonds is 10 percent annual interest. There are 15 years to maturity. a. Compute the price of the bonds based on semiannual analysis. b. With 10 years to maturity, if yield to maturity goes down substantially to 8 percent, what will be the new price of the bonds? (Please show all steps and explain)
Business
1 answer:
Dominik [7]3 years ago
6 0

Solution:

a.

N I/Y PV PMT FV

10 × 2 10 / 2 CPT

PV −1,000.00 100 / 2 1,000

10%/2=5% *1000= 50

n=20

i=5%

pmt 50

fv 1000

Answer: $1,000.00

b.

N I/Y PV PMT FV

5 × 2 10 / 2 CPT

PV −1,000.00 100 / 2 1,000

n=8

pmt 50

i 5%

fv 1000

Answer: $1,000.00

a.

Appendix D

Present value of interest payments:

PVA = A × PVIFA (5%, 20)

= $50 × 12.462

= $623.10

Appendix B

Present value of principal payment at maturity:

PV = FV × PVIF (5%, 20)

= $1,000 × .377

= $377.00

Bond price = $623.10 + 377.00

= $1,000.10

b.

Appendix D

Present value of interest payments:

PVA = A × PVIFA (5%, 10)

= $50 × 7.722

= $386.10

Appendix B

Present value of principal payment at maturity:

PV = FV × PVIF (5%, 10)

= $1,000 × .614

= $614.00

Bond price = $386.10 + 614.00

= $1,000.10

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If the threaded heating element in a percolator is not very tightly mounted a leak may develop. For percolators, all mating surfaces must be tightly screwed together in order to prevent leaking. A build up of hard water deposits, dried milk and other such substances around the gasket may also result in leaking.
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3 years ago
Last year, a corporation purchased an office building for $220,000, of which $30,000 was allocated to the land on which the buil
Alex_Xolod [135]

Answer:

$4872

Explanation:

Given: Purchase price of an office building= $220000.

           Out of cost building, $30000 was allocated to the land.

Remember, As per current US Tax code, commercial building can be depreciated over 39-year straight-line for commercial property.

Now, calculating the current year depreciation deduction.

We know, land is not depreciable.

∴ Cost of building= Purchase\ price\ of\ building - cost\ of\ land

⇒ Cost of building= \$ 220000 - \$ 30000

∴ Cost of building= \$ 190000

Next calculating depreciation using straight line method ignoring salvage value.

Depreciation deduction= \frac{\$ 190000}{39}

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3 years ago
POSSIBLE POINTS:
77julia77 [94]

Answer:

Bob must use  $4,000 newspaper ads in two numbers

Explanation:

As given in the question -

Total number of people affected by $5,000 TV ad = 250

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3 years ago
1) Torria wants to open a hair salon.
AnnyKZ [126]

Answer:

Case 1: Torria wants to open a hair salon

<u><em>a. 2 possible sources of revenue the business may have.</em></u>

As a hair salon, there are several sources of revenue as following:

+) First is the revenue from providing hair care services for customers. This is the main sources, generated by providing services such as cutting, dyeing, etc.

+) The second source is from training. Torria can open courses for people who want to learn about hair care skills.

<em><u>b. 5 possible expenses the business may have</u></em>

To establish and operate a business, Torria may face these expense:

+) First is the fee for place. Torria will have to pay regularly fee to borrow rooms/ house to place the salon.

+) Second is the initial investment in interior and facilities such as chair, bed,  mirror; the hair care products like shampoo, essential oils, etc.

+) Third is the salary Torria has to pay for the employees.

+) Fourth is the expense for advertising including: printing posters/ online advertisement, etc.

+) Last but not least is billing on electricity or water

Case 2: Mykeda wants to open an electronic store selling Apple products.

<em><u>a. Other source of revenue than selling electronics</u></em>

Other than selling electronic product, Mykeda can provide the services of repairing electronics to generate revenue. In this services, users can bring their broken phone to Mykeda's store to fix it and pay for that.

<em><u>b. 4 expenses </u></em>

4 expenses that Mykeda may have when opening a store are:

First, Mykeda has to pay for borrowing location on a street or in a mall to open the store.

In addition, there would be cost for the furniture of the store such as sofas, shelves, etc.

The third expense is on the investment to buy Apple products to resell.

And the fourth one is salary that Mykeda has to pay for salesman or other staffs in the store.

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