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tester [92]
3 years ago
9

Last year, Bailey bought a bond for $1,000 that promises to pay $110 a year. This year, a person who buys a bond for $1,000 rece

ives $125 a year. If Bailey were to sell his (old) bond, its price would be approximately:__________.a. $880.b. $1,125.c. $1,136.d. $1,110.
Business
1 answer:
miv72 [106K]3 years ago
6 0

Answer:

a. $880.

Explanation:

Bailey bought a bond for $1,000 that promises to pay $110 a year.

The interest rate was 110/1000 * 100 = 11%

This year, $1,000 receives $125 a year= 125/1000 * 100 = 12.5%. So, this year the interest rate now rises to 12.5%.

If Bailey were to sell his (old) bond, the price should be 110/12.5% = 110/0.125 = $880.

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Answer:

NPV -87,259.64

Explanation:

P0   -100,000

Salvage Value 15,000

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We will calculate the present value of the salvage value and the working capital realese

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3,177.59

\frac{15,000}{(1 + 0.12)^{4} } = PV

9,532.77

NPV = investment - cash flow discounted

NPV = -100,000 + 9,532.77 + 3,177.59 = -87,259.64

3 0
3 years ago
John Hernandez is 24 years old and has saved enough money to fund an adequate emergency fund. In addition, he has saved $5,600 t
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Answer:

C. Growth

Explanation:

Starting investment early is something that is always encouraged and that is the case of John Hernadez here. By starting early, before he retires, he'd have been able to grow is investment portfolio substantially and even be a millionaire by the time of his retirement. Growth is the most important factor for John, that's why is he's starting his investment early. With the time given for growth, investment value may increase in value and it allows time for appreciation of stock price.

4 0
3 years ago
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Selected information from Gerrard, Inc.’s financial activities in the year 2004 was as follows: Net income was $330,000. The tax
ValentinkaMS [17]

Answer:

$0.26

Explanation:

diluted earnings per share (EPS) = (net income - preferred dividends) / (weighted average outstanding shares + diluted shares)

net income = $330,000

preferred dividends = 2,000 x $500 x 8% = $80,000. Since the preferred stocks are convertible, they will be considered diluted shares. Therefore, no preferred dividends will be included in the calculation.

weighted average outstanding shares:

  • January 1 = 700,000 x 12/12 = 700,000
  • March 1 = 200,000 x 10/12 = 166,666.7
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diluted shares = 2,000 preferred stocks x 200 = 400,000

diluted EPS = $330,000 / (866,666.7 + 400,000) = $0.260526247 ≈ $0.26

8 0
3 years ago
A firm has conducted market research and found that customer satisfaction with its product is quite high. Nonetheless, repurchas
VladimirAG [237]

The research design evidently has  a problem with  <u>"validity".</u>


Validity refers to how well a logical test or bit of research really allots what it sets to, or how well it mirrors the truth it professes to speak to. Like reliability, validity in this sense is an idea drawn from the positivist logical convention and necessities particular understanding and utilization with regards to qualitative research.  

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3 years ago
In year 2, Sammi Corp. changes its inventory method from FIFO to the weighted-average method. Under the weighted-average method,
Dima020 [189]

Answer:

Two adjustments must be made to year 1's financial statements:

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Explanation:

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