Far Side Corporation is expected to pay the

A 27-year U.S. Treasury bond with a face value of $1,000 pays a coupon of 6.00% (3.000% of face value every six months). The rep

nikdorinn [45]

Answer:

(A) $1,055.35 (B) $2,180.53 (C) $780.07 (D) $412.08.

Explanation:

The tenor of the bond is 27 years i.e. (27 * 2=) 54 periods of 6 months each (n).

Face Value (F) = $1,000

Coupon (C) = 6% annually = 3% semi annually = (3% * 1000 face value) = $30.

The Present Value (PV) of the Bond is computed as follows.

PV of recurring coupon payments + PV of face value at maturity

= $\frac{C(1-(1+r)^{-n}) }{r} + \frac{F}{(1+r)^{n}}$

A) Yield = 5.6% annually = 2.8% semi annually.

$PV = \frac{30(1-(1.028)^{-54}) }{0.028} + \frac{1,000}{(1.028)^{54}}$

= 830.25 + 225.10

= $1,055.35.

B) Yield = 1% annually = 0.5% semi annually.

$PV = \frac{30(1-(1.005)^{-54}) }{0.005} + \frac{1,000}{(1.005)^{54}}$

= 1,416.64 + 763.89

= $2,180.53.

C) Yield = 8% annually = 4% semi annually.

$PV = \frac{30(1-(1.04)^{-54}) }{0.04} + \frac{1,000}{(1.04)^{54}}$

= 659.79 + 120.28

= $780.07.

D) Yield = 15% annually = 7.5% semi annually.

$PV = \frac{30(1-(1.075)^{-54}) }{0.075} + \frac{1,000}{(1.075)^{54}}$

= 391.95 + 20.13

= $412.08.

4 0

3 years ago

What is 30% of 3/5

Setler79 [48]

Answer: Solution for What is 30 percent of 3/5

30 percent *3.50 =

(30:100)*3.50 =

(30*3.50):100 =

105:100 = 1.05

Now we have: 30 percent of 3.50 = 1.05

Question: What is 30 percent of 3.50?

Percentage solution with steps:

Step 1: Our output value is 3.50.

Step 2: We represent the unknown value with $x$x.

Step 3: From step 1 above,$3.50=100\%$3.50=100%.

Step 4: Similarly, $x=30\%$x=30%.

Step 5: This results in a pair of simple equations:

$3.50=100\%(1)$3.50=100%(1).

$x=30\%(2)$x=30%(2).

Step 6: By dividing equation 1 by equation 2 and noting that both the RHS (right hand side) of both

equations have the same unit (%); we have

$\frac{3.50}{x}=\frac{100\%}{30\%}$

3.50

x=

100%

30%

Step 7: Again, the reciprocal of both sides gives

$\frac{x}{3.50}=\frac{30}{100}$

x

3.50=

30

100

$\Rightarrow x=1.05$⇒x=1.05

Therefore, $30\%$30% of $3.50$3.50 is $1.05$

Explanation:

7 0

3 years ago

Read 2 more answers

Excerpts from Hulkster Company's December 31, 2021 and 2020, financial statements are presented below: 2021 2020 Accounts receiv

Arisa [49]

Answer:

7.8%

Explanation:

The formula and the computation of the return on assets is shown below:

Return on assets = (Net income) ÷ (average of total assets)

where,

Net income is $32,500

And, the average of total assets equal to

= (Beginning assets + ending assets) ÷ 2

= ($405,000 +$425,000) ÷ 2

= $415,000

So, the return on assets is

= $32,500 ÷ $415,000

= 7.8%

6 0

3 years ago

A company issues 5%, 12-year bonds with a face amount of $70,000 for $64,070 on January 1, 2021. The market interest rate for bo

KIM [24]

Answer:

Date Particular Debit Credit

Jan 1, 2021 Cash $64,700

Discount on bond payable $5,930

Bond payable $70,000

Jun 30,2021 Interest expense $3,882

Discount on bonds payable $2,132

Cash $1,750

Workings:

Semi annual interest payment = 70,000 x 5% x 6/12

= $1,750

Interest expense on June 30, 2021 = Carrying value of bonds x Market interest rate

= 64,700 x 6%

= $3,882

Discount on bonds payable amortized on June 30, 2021 = Interest expense - Interest payment

= 3,882 - 1,750

= $2,132

7 0

3 years ago

You win the lottery and must decide how to take the payout. use an 8% discount rate. what is the present value of $10,000 a year

Rama09 [41]

For compounding interest, there is a formula relating the present worth (P) with the annuity (A). This is shown in the picture. The 'i' is the effective interest rate while n is the time. You should make sure that you are consistent with the units. If your time is in terms of years, your interest should be in terms of percent per year compounded yearly. Moreover, your annuity should be per yearly basis. In this case, it is already consistent so we don't need to convert. Substituting the values,

P = 10,000[(1.08^9-1)/(0.08*1.08^9)]
P = $62,468.88

8 0

3 years ago