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NemiM [27]
2 years ago
11

Rolling Coast Inc. issued BBB bonds two years ago. These bonds provided a yield to maturity (YTM) of 11.5 percent. Long-term ris

k-free government bonds were yielding 8.7 percent at the time. The current risk premium on BBB bonds versus government bonds is half of what it was two years ago. If the risk-free long-term government bonds are currently yielding 7.8 percent, then at what interest rate should Rolling Coast expect to issue new bonds
Business
1 answer:
vaieri [72.5K]2 years ago
8 0

Answer: 9.2%

Explanation:

The interest rate that Rolling Coast should expect to issue new bonds will be calculated thus:

Firstly, we will calculate the previous risk premium on BBB bonds which will be:

= 11.5% - 8.7% = 2.8%

Then, the new risk premium on BBB bonds will be:

= Previous risk premium / 2

= 2.8% / 2

= 1.4%

Then, the interest rate that Rolling Coast should expect to issue new bonds will be:

= 7.8% + 1.4%

= 9.2%

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Powers Company reported net sales of $1,250,000, average Accounts Receivable, net of $73,500, and net income of $53,150. The acc
ipn [44]

Answer:

17 times

Explanation:

Data provided in the given question :-

Net Sales = $1,250,000

Average account Receivable = $73,500

Net Income = $53,150

So, the accounts receivable turnover ratio is given below :-

Accounts receivable turnover ratio = Net sales ÷ Average accounts receivable

= $1,250,000 ÷ $73,500

= 17 times

Hence the net income is ignored for calculating the account receivable turnover ratio.

4 0
3 years ago
What is considered sin tax?
gayaneshka [121]

Definition:

Tax imposed by the government on the things which are harmful for the human health is termed as Sin Tax. For example, Tobacco products, drugs, cola drinks, gambling, fast food items etc.

Why it is mainly imposed:

It is imposed to increase the prices of the above given harmful products which consequently, might can be helpful in decreasing their consumption.

7 0
3 years ago
The market for land is competitive and in equilibrium at the rental rate of $500 per acre and the supply of land is perfectly in
Elina [12.6K]

Answer:

Falls by $100,000

Explanation:

In this question, we are asked to calculate and state what happens when demand for land falls and as a result, there is also a fall in rental rate.

Firstly, we cost the total of 1000 acres. The price of 1000 acres is simply the multiplication of the 1000 acres by the $500 unit price= 500 * 1,000 = $500,000

We now calculate the price or worth of the land when demand falls

This is mathematically equal to 400 * 1000 = $400,000

Now, the net economic rent fall would be $500,00 - $400,000 = $100,000

Hence, there would be a fall of $100,000 as the demand for land falls

5 0
3 years ago
The last four years of returns for a stock are as​ follows: Year 1 2 3 4 Return −4.5​% 28.1​% 12.2​% 3.7​% a. What is the averag
jeyben [28]

Answer:

a. What is the average annual​ return?

average annual return (mean) = (-4.5% + 28.1% + 12.2% + 3.7%) / 4 = 9.875%

b. What is the variance of the​ stock's returns?

variance = [(-4.5% - 9.875%)² + (28.1% - 9.875%)² + (12.2% - 9.875%)²) + (3.7% - 9.875%)²] / 4 = (206.64 + 332.15 + 5.41 + 38.13) / 4 = 582.33 / 4 = 145.5825

c. What is the standard deviation of the​ stock's returns?

standard deviation = √145.5825 = 12.06%

4 0
3 years ago
What is the purpose of using predetermined overhead rates: Variation in cost assignment due to short-term variations in volume c
Sunny_sXe [5.5K]

Answer:

All of the answers are correct.

Explanation:

At the beginning of the accounting period a pre-determined overhead is computed by dividing the estimated overhead production by the estimated basis of operations. The default overhead rate is then applied to manufacturing, so that the standard cost for a product may be calculated

The purpose of using pretermined overhead rates are

Delays in product costing can be avoided

Variation in cost assignment due to seasonality can be prevented

Variation in cost assignment due to short-term variations in volume can be prevented

The Use of predetermined overhead rates serves all the above purposes

Hence, all answers are correct.

6 0
2 years ago
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