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Vanyuwa [196]
3 years ago
7

Suppose that you buy a two-year 7.4% bond at its face value. a-1. What will be your total nominal return over the two years if i

nflation is 2.4% in the first year and 4.4% in the second?
Business
1 answer:
Harman [31]3 years ago
8 0

Answer: 15.35%

Explanation:

The total nominal return over the two years if inflation is 2.4% in the first year and 4.4% in the second year will be calculated thus:

= (1+Interest rate)² -1

= (1 + 7.4%) - 1

= (1 + 0.074)² - 1

= 1.074² - 1

= 1.153476 - 1

= 0.153476

= 15.35% over the two years

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Ware Co. produces and sells motorcycle parts. On the first day of its fiscal year, Ware issued $35,000,000 of five-year, 12% bon
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Answer:

Cash proceeds is $37,702,607.23  

First premium amortization $214,869.64

Second premium amortization is $225,613.12

First year interest expense is $ 3,759,517.24  

Explanation:

The amount of cash proceeds from the bond issue is the pv of the bond using the pv formula,=-pv(rate,nper,pmt,fv)

rate is 10% yield to maturity divided 2 since interest is semi-annual i.e 5%

nper is 5 years multiplied by 2=10

pmt is the semi-annual interest payable by the bond i.e $35,000,000*12%*6/12=$2,100,000

fv is the face value of the bond at $35,000,000

=-pv(5%,10,2100000,35000000)

pv=$37,702,607.23  

The amount of premium to be amortized in first semi-annual interest payment:

Interest expense=$$37,702,607.23*10%/2=$1,885,130.36  

coupon interest=$35,000,000*12%/2=$2,100,000

Premium amortized=$2,100,000-$1,885,130.36  

premium amortized=$214,869.64  

The amount of premium to be amortized in second semi-annual interest payment:

interest expense=($37,702,607.23+$2,100,000-$1,885,130.36)*10%/2

                           =$1,874,386.88  

Premium amortized=$2,100,000-$1,874,386.88

premium amortized=$225613.12

Bond expense for the first payment= 37,702,607.23*10%/2  

                                                           =$1,885,130.362

Bond expense for the first payment=  37,487,737.59  *10%/2  

                                                           =$ 1,874,386.88  

First year bond interest expense= 1,874,386.88+1,885,130.362  

                                                      =$ 3,759,517.24  

                                                     

Find attached schedule in addition

Download xlsx
4 0
3 years ago
When Kira graduated with a degree in computer science, she started her software company. On her first day of operations, she pos
kobusy [5.1K]

Answer:

Her expectation that all her employees would adhere to the laws applicable to the business

Explanation:

By adhering to the laws applicable to her business, and expecting that her employees would follow suit, helped to protect the business from the liability related to breaching laws. Moreover, operating within the legal requirements serves as the first step towards operating as an ethical firm.  

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2 years ago
____________ helps to preserve the relationship between workers and management because it helps them listen to the other side.
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Answer:

The correct answer is letter "C": Mediations.

Explanation:

Mediations are alternative methods to solve conflicts that have the inherent goal of reaching an integral solution of the conflict for the parties involved avoiding to take the problem to court. During the mediation, the parties involved express their demands and a mediator comes to the best conclusion that benefits the parties as equal as possible.

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3 years ago
Carlisle Enterprises, a specialty pharmaceutical manufacturer, has been losing market share for three years because several key
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Answer:

It should obtain at least:  $  17,363,986.04

Explanation:

we have several cash flow of different magnitude. As thisi s a finite sum of cash flow, we solve using present value of each lump sum using our WACC as discount rate:

\frac{Nominal}{(1 + rate)^{time} } = PV

\frac{8,500,000}{(1 + 0.15)^{1} } = PV

\frac{7,500,000}{(1 + 0.15)^{2} } = PV

\frac{5,000,000}{(1 + 0.15)^{3} } = PV

\frac{2,000,000}{(1 + 0.15)^{4} } = PV

\frac{500,000}{(1 + 0.15)^{5} } = PV

Year      Nominal Cash Flow Present Value

1   8,500,000.00      7,391,304.35

2   7,000,000.00    5,293,005.67

3   5,000,000.00       3,287,581.16

4   2,000,000.00      1,143,506.49

5      500,000.00       248,588.37

Total Present value  17,363,986.04

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3 years ago
From an Associated Press article on Venezuela dated January 22, 2008: "... troops are cracking down on the smuggling of food ...
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Answer:

C. Letter C; demand exceeds supply, resulting in a shortage

Explanation:

I had put my answer as A on the test and got it wrong. But this is the correct answer C.

5 0
3 years ago
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