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olga55 [171]
3 years ago
11

Dakota Corporation decided to issue three-year bonds denominated in 5 million Russian rubles at par. The bonds have a coupon rat

e of 17 percent. If the ruble is expected to appreciate from its current level of $.03 to $.032, $.034, and $.035 in years 1, 2, and 3, respectively, what is the financing cost of these bonds?
Business
1 answer:
sertanlavr [38]3 years ago
8 0

Answer:

23.39%

Explanation:

From the given information, the amount was raised in rubies, Hence, we will convert them to dollars to be able to pay back the needed obligations.

However, according to the exchange rates, the IRR of dollar cash flow is the actual cost of financing that the company will address.

By applying the EXCEL FORMULA to compute the actual cost of financing, we get;

   A                    B                    C                    D                          E

Coupon              17%

Year                      0                    1                    2                         3

Cashflow in

rubles            5,000,000   5000000*17%  5000000*17%    5000000+850

                                           = 850000          = 850000         000

                                                                                                 = 5850000

Exchange          $0.30         $0.032                 $0.034              $0.035

rate

(per rubles)   5,000,000       5,000,000          5,000,000      5,000,000

Cash flow      × 0.03            × 0.032               × 0.034           × 0.035

in dollars    =  $150000.00  27200.00        28900.00           204750.00

IRR                   23.39%

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The town of Sanford, Maine, decided to auction off a plot of land owned by the town. The town advertised that it would accept bi
rodikova [14]

Answer:

The answer is: Both parties could win, depending if there were other conditions established for the auction.

Explanation:

Usually when an auction is carried out there are conditions established beforehand by the auctioneer that must be fulfilled in order for the sale to be completed.

In this case, since we don´t know what other conditions the town of Sanford included in the auction, if any other condition at all, we can´t conclude which party could win the lawsuit. For instance if a reserve was required but Arthur and Arlene didn´t do the reserve deposit, then they will obviously lose. The same happens with other established conditions like a minimum price set, etc. But if no other condition established, then Arthur and Arlene could win.

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3 years ago
What will affect the amount of net pay you earn on your paycheck
photoshop1234 [79]
How much taxes they take off
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Evelyn, who owns and operates Eve's Farm & Garden Company, agrees to sell Hill & Dale Produce, Inc., fifty bushels of ap
IrinaK [193]

Answer:

The answer is: A) breached

Explanation:

Evelyn breached her contract with Hill & Dale because she failed to perform her duties. In order for the contract to end, both parties must fulfill their duties or both parties must agree to cancel the contract. Any party involved in a contract can sue for damages, so Hill & Dale are entitled to sue Evelyn for compensatory damages.

5 0
3 years ago
Granfield Company has a piece of manufacturing equipment with a book value of $44,000 and a remaining useful life of four years.
Troyanec [42]

Answer:

$26,000

Explanation:

The calculation of Net increase or decrease in income on replacement is shown below:-

Net savings in Variable cost for 4 years = Variable manufacturing costs × Life

= $19,800 × 4

= $79,200

Net Investment to be made in New machine = Initial investment of new machine - Traded in value of old machine

= $128,000 - $22,800

= $105,200

Net financial disadvantage of replacement = Net savings in Variable cost for 4 years - Net Investment to be made in New machine

= $79,200 - $105,200

= $26,000

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6 0
4 years ago
The fair rate is 8%. What is 100 per year, forever, worth now?
777dan777 [17]

Answer:

1. $1,250

2. $855.95

3. $3,333.33

4. $92.59

5. $46.32

6. $671.01

Explanation:

1.

$100 per year forever

Constant Cash flow every year forever is actually a perpetuity its present value is

PV of Perpetuity = Cash flow / rate of return

PV of $100 Perpetuity = $100 / 0.08 = $1,250

2.

$100 per year for 15 years

Constant Cash flow every year for specific time period is actually a Annuity  its present value is

PV of annuity = P + P [ ( 1 - ( 1 + r )^-n ) / r ] = $100 + $100 [ ( 1 - ( 1 + 0.08 )^-15 ) / 0.08 ] = $855.95

3.

$100 per year grow at 5% forever

It is a growing perpetuity and its present value will be calculated as follow

Present value of growing perpetuity = Cash flow / Rate of return - growth rate

Present value of growing perpetuity = $100 / 0.08 - 0.05 = $3,333.33

4.

$100 once at the end of this year

Present value = P ( 1 + r)^-n = $100 ( 1 + 0.08 )^-1 = $92.59

5.

$100 once after 10 years

Present value = P ( 1 + r)^-n = $100 ( 1 + 0.08 )^-10 = $46.32

6.

$100 each year for 10 years @ 8%

PV of annuity = P + P [ ( 1 - ( 1 + r )^-n ) / r ] = $100 + $100 [ ( 1 - ( 1 + 0.08 )^-10 ) / 0.08 ] = $671.01

5 0
3 years ago
Read 2 more answers
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