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]
3 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]3 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
"A potential client is 81 years old and has asked his representative for recommendations of speculative "Dot Com" stocks. The cu
torisob [31]

Answer:

allocate a portion of the customer's portfolio to "Dot Com" stocks that will not reduce the customer's retirement income below the amount needed for comfortable living

Explanation:

Given that the potential client is concerned that his purchasing power is decreasing and wishes to allocate an increased portion of his portfolio to aggressive growth stocks.

Hence, the best recommendation is to "allocate a portion of his portfolio to "Dot Com" stocks that will not reduce his retirement income below the amount needed for comfortable living"

8 0
3 years ago
Sorry to bother but i need someone to talk to me if your older than 15 don't bother to message thank,you❤
Elden [556K]

Answer:

Does 16 mean no too?

Explanation:

7 0
3 years ago
While setting the price of a product, what must managers consider? A cost of the whole marketing mix B) buying capacity of the c
Naddik [55]

Answer:

While setting the price of a product, managers must consider all of the following: A) cost of the whole marketing mix B) buying capacity of the customers C) profit it should bring the company D) transportation cost E) personnel cost to the company

Explanation:

Key factors in calculating the sale price can be:

  • Costs are a major factor in determining the selling price and a way of forming a price that is primarily related to costs called “ground” because it represents the minimum at which the price can be set. It includes cost plus other costs with no projected or minimal profit;
  • Demand/buying capacity as a key factor in price calculation is tied to a method called the "ceiling" because capacity exceeds the price limit that customers are willing to accept to get a product or service.
  • Competition as a pricing factor refers to alternatives that customers can choose from, and competition allows them to do so;

Cost-based pricing has its sub-methods such is Cost plus method

The basic principle is to add a rate of profit to the sum of direct and indirect costs. This way price consider a profit to it should bring to company.

Direct costs include material and labor costs, and indirect or general costs comprise a portion of fixed indirect costs such as depreciation, administration costs, sales costs and other general costs.

Formula: price = Direct costs + Indirect costs + Rate of profit

5 0
3 years ago
For a not-for-profit private animal rescue agency, which account should be credited to record a gift of cash from an outside par
sesenic [268]

Answer:

Unrestricted net assets - contributions

Explanation:

Unrestricted net assets are donations made to any nonprofit organization (in this case the animal rescue agency) that can be used for unrestricted general expenses. The rescue agency can use this money for their normal day to day expenses or for whatever other expense that they consider necessary without any type of restriction.

While restricted net assets are donations that must be used for an specific purpose set by the donor.

8 0
3 years ago
What is the most popular ownership structure within the u.S.?
Shkiper50 [21]

Answer: As far as business is concerned, the most popular ownership structure in the U.S. is SOLE PROPRIETORSHIP.

Explanation:

Sole proprietorship is the form of business that is owned by a single person, it is easy to form and the business owner exercises total control over their business.

The business owner is solely liable for losses made in the business, and also enjoys all the profits of the business alone.

Usually this kind of business will mostly end with the death of the business owner.

3 0
3 years ago
Other questions:
  • If a corporation has two classes of common stock, what is typically unique about the second or class b common stock?
    12·1 answer
  • Return on investment is superior to residual income as a means of measuring performance because it encourages managers to make i
    15·1 answer
  • The following information is available for Wenger Corporation for 2019 (its first year of operations).1. Excess of tax depreciat
    5·1 answer
  • Seller Deangelo agreed to mediate the radon gas problem in his basement within 31 days. It has been 31 days and he still has not
    6·1 answer
  • Which statement provides the best description of the term lifelong learning?
    5·1 answer
  • When china's clothing industry expands, the increase in world supply lowers the world price of clothing. consider the effects th
    8·2 answers
  • Suppose the demand for peaches decreases. what will happen to producer surplus in the market for peaches?
    12·1 answer
  • . In the step-by-step deployment of MIS in a business, which (and why) of the following will you consider as a Foundation Step f
    10·1 answer
  • Which of the following would have a low likelihood of being organized as a profit center? A maintenance department that charges
    9·2 answers
  • If you don't own a home or a car, your liability is
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!