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Natalija [7]
2 years ago
13

You find a zero coupon bond with a par value of $10,000 and 13 years to maturity. If the yield to maturity on this bond is 4.9 p

ercent, what is the dollar price of the bond
Business
1 answer:
PIT_PIT [208]2 years ago
4 0

Answer:

$18,763.38

Explanation:

Calculation to determine the dollar price of the bond

Using this formula

Value of bond=Par value/(1+YTM/2)^(2*time period)

Let plug in the formula

Value of bond=10,000/(1+0.049/2)^(2*13)

Value of bond=10,000/(1.0245)^26

Value of bond=10,000/1.8763378

Value of bond=$18,763.38(Approx).

Therefore the dollar price of the bond is $18,763.38

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Costly Corporation is considering using equity financing. Currently, the firm's stock is selling for $31.00 per share. The firm'
Setler [38]

Answer:

Cost of external equity= 26.9%

Explanation

<em>According to the dividend valuation, the value of a stock is the present value of expected future dividends discounted at the required rate of return.</em>

The model can me modified to determined the cost of equity having flotation cost as follows:

Ke = D(1+r )/P(1-f) + g

Ke= Cost of equity

D- current dividend,

D(1+g) - dividend next year

p- price of stock - 31,00$

f - flotation cost - 14%

g- growth rate - 7%

Ke= 5.30/31× (1-0.14)  +  0.07

 = 0.2687997  × 100

= 26.9%

4 0
3 years ago
Chez Fred Bakery estimates the allowance for uncollectible accounts at 3% of the ending balance of accounts receivable. During 2
notsponge [240]

Answer:

The balance of accounts receivable on January 1, 2018 is $31,180.

Explanation:

The following are given in the question:

Percentage of allowance for uncollectible accounts = 3%

Credit sales = $125,000

Collections = $131,000

Amount written off = $180

Therefore, we have:

Account receivable on 31 December 2018 * 3% = $750

Account receivable on 31 December 2018 = $750 / 3% = $25,000

Accounts receivable on 01 January 2018 = Account receivable on 31 December 2018 - Credit sales + Collections + Amount written off = $25,000 - $125,000 + $131,000 + $180 = $31,180

Therefore, the balance of accounts receivable on January 1, 2018 is $31,180.

8 0
3 years ago
Tanner-UNF Corporation acquired as a long-term investment $200 million of 7% bonds, dated July 1, on July 1, 2018. The market in
likoan [24]

Answer:

1. Prepare the journal entry to record Tanner-UNF’s investment in the bonds on July 1, 2018 and interest on December 31, 2018, at the effective (market) rate.

July 1, investment in UNF bonds

Dr Investment in bonds HTM 200,000,000

   Cr Cash 160,000,000

   Cr Discount on bonds 40,000,000

December 31, interest revenue from investment in bonds

Dr Cash 7,000,000

Dr Discount on bonds 200,000

   Cr Interest revenue 7,200,000

Discount on bonds = ($160,000,000 x 4.5%) - ($200,000,000 x 3.5%) = $7,200,000 - $7,000,000 = $200,000

2. Prepare any additional journal entry necessary for Tanner-UNF to report its investment in the December 31, 2018, balance sheet.

Investment in bonds HTM = $200,000,000 (face value) - $39,800,000 (discount on bonds) = $160,200,000

Changes in the market value of bonds held to maturity are not considered by the company.

4. Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2019, for $310.0 million. Prepare the journal entry to record the sale.

Dr Cash 150,000,000

Dr Dr Discount on bonds 39,800,000

Dr Loss on investment in bonds HTM 10,200,000

   Cr Investment in bonds HTM 200,000,000

3 0
3 years ago
Project managers frequently face competing constraints. Identify these common constraints and describe approaches that project m
gizmo_the_mogwai [7]

Answer: The common constraints faced by project managers are project scope, cost and time.

Explanations:

The three main constraints faced by project managers are the project scope, cost and time. These constraints affect the quality of a project. In high quality projects, the product is delivered within its scope at the required budget and on time.

The constraints are usually connected to one another. For example, an increase in the project scope will require an increase in cost and time. Also, accelerating the project timeline may lead to a reduction in the project costs but also lower the scope.

A trade off in project occurs when one constraint is reduced so as to increase another constraint. For trade-offs to be successful, project managers should take time to scrutinize the organization's objectives and the expectations of the project by using a structure that allows the project manager look at other options for the constraints and find the greatest balance among the constraints and organizational goals.

6 0
3 years ago
System testing:
yarga [219]

Answer:

C) tests the functioning of the system as a whole.

Explanation:

System testing refers to a process in which a complete system is evaluated to make sure that it works properly and fulfills the requirements. According to this, the answer is that system testing tests the functioning of the system as a whole.

The other options are not right because system testing doesn't separate components or programs as it involves the actual evaluation of the whole system to find defects and it is done before the acceptance testing.

3 0
3 years ago
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