1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Dvinal [7]
2 years ago
8

Problem 7-5 Coupon Rates [LO2] Gabriele Enterprises has bonds on the market making annual payments, with eight years to maturity

, a par value of $1,000, and selling for $952. At this price, the bonds yield 6.1 percent. What must the coupon rate be on the bonds
Business
1 answer:
kakasveta [241]2 years ago
4 0

Answer:

5.32%

Explanation:

The computation of the coupon rate on the bonds is shown below:

As we know that

Current price = Annual coupon × Present value of annuity factor(6.1%,8 ) + $1,000 × Present value of discounting factor(6.1%,8)

$952 = Annual coupon × 6.18529143 + $1,000 × 0.622697222

Annual coupon is

= ($952 - 622.697222) ÷ 6.18529143

= $53.24

Now

Coupon rate is

= Annual coupon ÷ Face value

= $53.24 ÷ $1,000

= 5.32%

Working notes:

1. Present value of annuity is

= Annuity × [1 - (1 + interest rate)^-time period] ÷ rate

= Annual coupon × [1 - (1.061)^-8] ÷ 0.061

= Annual coupon × 6.18529143

And,

2.Present value of discounting factor is

= $1,000 ÷ 1.061^8

= $1000 × 0.622697222

You might be interested in
Bridgeport Company had the following stockholders’ equity as of January 1, 2017.Common stock, $5 par value, 18,400 shares issued
harkovskaia [24]

Answer:

b

Explanation:

4 0
4 years ago
If nicotine in cigarettes is highly addictive, why would it make economic sense for producers of cigarettes to offer free sample
makkiz [27]
If the nicotine cigarettes are highly addictive and they were to offer the free samples to young adults then it will make the people be highly addictive in the nicotine cigarettes and this will cause the economy in the producers to have a less demand in elasticity. If it has a less elasticity, then it will cause a large price change, affecting the consumed quantity by the consumers.
8 0
3 years ago
Read 2 more answers
Which of the following is true about the ISO? Question 1 options: It makes technical recommendations about data communications i
Vadim26 [7]

Answer:

All of the above

Explanation:

ISO means: International Organization for Standardization.  It is one of the most important standard making bodies.

This organization has issued the standard ISO 15118 (1-9) that gives technical recomendations about data communication interfaces for road vehicles. So, both concepts listed above are true.

6 0
3 years ago
The oil and energy industries are under the regulatory authority of:.
Dafna1 [17]

Answer:

The Texas Railroad Commission

7 0
2 years ago
Butler Corporation is considering the purchase of new equipment costing $30,000. The projected annual after-tax net income from
kobusy [5.1K]

Answer:

($3,100)

Explanation:

Net cash flows each year = Projected annual after-tax net income + Depreciation

Net cash flows each year = $1,200 + $10,000

Net cash flows each year = $11,200 each year

Total value of inflows in 3 years = Net cash flows each year * Annuity factor of (10%,3 years)

Total value of inflows in 3 years = $11,200 * 2.4018

Total value of inflows in 3 years = $26,900

Net Present value = Present value of inflows - Cash outflow

Net Present value = $26,900 - $30,000

Net Present value = ($3,100)

So, tnet present value of the machine is ($3,100).

7 0
3 years ago
Other questions:
  • What three items must be considered when scheduling appointments?
    13·1 answer
  • Could a sales representative easily translate his or her skills into being a buyer? What would be challenging about this shift?
    7·1 answer
  • Wildhorse Co. began the year 2022 with retained earnings of $651000. During the year, the company sold additional shares of stoc
    9·1 answer
  • Bloomfield Bakers accounts for its investment in Clor Confectionary under the equity method. Bloomfield carried the Clor investm
    6·1 answer
  • Suppose that there is asymmetric information in the market for used cars. Sellers know the quality of the car that they are​ sel
    7·1 answer
  • Financial aspects of employment
    15·1 answer
  • The December 31, 2021, post-closing trial balance for Strong Corporation is presented below:
    7·1 answer
  • Account which shows gross profit or gross loss of the business is called​
    7·1 answer
  • Which of the following is not a source of income?
    8·1 answer
  • Which of the following is true about organizational change?
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!