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cluponka [151]
2 years ago
13

has issued bonds that have a 8% coupon rate, payable semiannually. The bonds mature in 8 years, have a face value of $1,000, and

a yield to maturity of 5%. What is the price of the bonds
Business
1 answer:
snow_tiger [21]2 years ago
3 0

Answer:

Bond Price​= $1,195.82

Explanation:

Giving the following information:

Face value= $1,000

YTM= 0.05/2= 0.025

Years tomaturity= 8*2= 16 semesters

Coupon= (0.08/2)*1,000= $40

<u>To calculate the price of the bond, we need to use the following formula:</u>

Bond Price​= cupon*{[1 - (1+i)^-n] / i} + [face value/(1+i)^n]

Bond Price​= 40*{[1 - (1.025^-16)] / 0.025} + [1,000/(1.025^16)]

Bond Price​= 522.2 + 673.62

Bond Price​= $1,195.82

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Last year Canada’s economy had a surge in exports and increased demand for additional economic outputs. Because of the great dem
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Answer:

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If Canada's increase in labor costs is paired with an increase in productivity (usually new technologies), then the economy should be able to grow since private consumption and investment will increase due to higher wages.

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The economic development of a country is dependent on all of the following except Part 2 A. improving education. B. limiting pro
Stolb23 [73]

The economic development of a country is dependent on all of the following except promoting protectionist barriers. Hence, option D is correct.

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5 0
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4 0
3 years ago
Read 2 more answers
A firm is considering two mutually exclusive projects, X and Y, with the following cash flows:
Murrr4er [49]

Answer: MIRR (project x ) = 3.42% , Project Y = 4.51%

Explanation:

Modified internal Rate of return

Project X

Period (n) = 4

Weighted Average Cost of equity(WACC) = 8.0%

Cash out flow = -$1000

Cash Inflows = $100 year 1 , $280 year 2 , 370 year 3 ,$700 year 4

Present Value Cash Inflows = PVCIF = Cash Inflow/(1+WACC)^n

PVCIF = 100/(1+0.08)^1 + 280/(1+0.08)^2 + 370/(1+0.08)^3 + $700/(1+0.08)^4

PVCIF = 95.592592593 + 240.05486968 + 293.71792918 + 514.5208969

Present Value of Cash inflows (PVCIF) = $1143.8862884

Present Value of Cash out flows(PVCOF) = -$1000

Modified Internal Rate of Return (MIRR) = \sqrt[n]{\frac{PVCIF}{PVCOF} } -1  

Modified Internal Rate of Return (MIRR) = \sqrt[4]{\frac{1143.8862884}{10000} } -1

Modified Internal Rate of Return (MIRR) = 0.034178971

Modified Internal Rate of Return (MIRR) = 3.41789971 = 3.42%

Project Y

Period (n) = 4

Weighted Average Cost of equity(WACC) = 8.0%

Cash out flow = -$1000

Cash Inflows = $1100 year 1 , $110 year 2 , $50 year 3 ,$55 year 4

Present Value Cash Inflows = PVCIF = Cash Inflow/(1+WACC)^n

PVCIF = $1100/(1+0.08)^1 + $110/(1+0.08)^2 + $50/(1+0.08)^3 + $55/(1+0.08)^4

PVCIF = 1018.5185185 + 94.307270233 + 39.691612051 + 40.42641904

Present Value of Cash inflows (PVCIF) = $10192.9438198

Present Value of Cash out flows(PVCOF) = -$1000

Modified Internal Rate of Return (MIRR) = \sqrt[n]{\frac{PVCIF}{PVCOF} } -1  

Modified Internal Rate of Return (MIRR) = \sqrt[4]{\frac{1192.9438198}{10000} } -1

Modified Internal Rate of Return (MIRR) = 0.0450931421

Modified Internal Rate of Return (MIRR) = = 4.50931421 = 4.51%

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3 years ago
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