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miss Akunina [59]
3 years ago
12

Gabriele Enterprises has bonds on the market making annual payments, with twelve years to maturity, a par value of $1,000, and s

elling for $960. At this price, the bonds yield 6.5 percent. What must the coupon rate be on the bonds
Business
1 answer:
wariber [46]3 years ago
3 0

Answer: 6.01%

Explanation:

To solve this question, we.will use the financial calculator. Based on the information given, then we will have:

FV = Future Value = $1,000.00

PV = Present Value = -$960.00

Bonds yield = 6.50

N = Number of years = 12

Therefore, CPT > PMT = Payment will be = $60.0973

Then, Coupon rate will be:

= Payment / Face Value

= 60.0973 / 1000

= 6.01%

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If a borrower can afford to make monthly principal and interest payments of 1000 and the lender will make a 30 year loan at 5 1/
Alexus [3.1K]

Answer:

The the largest loan this buyer can afford is 14,533.75.

Explanation:

This can be determined using the formula for calculating the present value of an ordinary annuity as follows:

Step 1: Calculations of the present value or the loan the buyer can afford for a 30 year loan at 5 1/2%

PV30 = P * ((1 - (1 / (1 + r))^n) / r) …………………………………. (1)

Where;

PV30 = Present value or the loan the buyer can afford for a 30 year loan at 5 1/2% =?

P = monthly payment = 1000

r = interest rate = 5 1/2% = 5.50% = 0.055

n = number of years = 30

Substitute the values into equation (1) to have:

PV30 = 1000 * ((1 - (1 / (1 + 0.055))^30) / 0.055)

PV30 = 1000 * 14.5337451711221

PV30 = 14,533.75

Step 2: Calculation of the present value or the loan the buyer can afford for a 20 year loan at 4 1/2%

PV20 = P * ((1 - (1 / (1 + r))^n) / r) …………………………………. (2)

Where;

PV30 = Present value or the loan the buyer can afford for a 20 year loan at 4 1/2% =?

P = monthly payment = 1000

r = interest rate = 4 1/2% = 4.50% = 0.045

n = number of years = 20

Substitute the values into equation (1) to have:

PV20 = 1000 * ((1 - (1 / (1 + 0.045))^20) / 0.045)

PV20 = 1000 * 13.0079364514537

PV20 = 13,007.94

Conclusion

Since 14,533.75 which is the present value or the loan the buyer can afford for a 30 year loan at 5 1/2% is greater than the 13,007.94 which is the present value or the loan the buyer can afford for a 20 year loan at 4 1/2%, it therefore implies that the the largest loan this buyer can afford is 14,533.75.

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Mo Meek, Lu Ling, and Barb Beck formed the MLB Partnership by making capital contributions of $79,200, $308,000, and $492,800, r
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Answer:

which subject questions

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3 years ago
Which of the following is NOT a benefit of specialization and trade? Select one: a. Increase in productivity from specialization
lbvjy [14]

Answer:

b. It creates equality throughout society

Explanation:

Specialisation & Trade refer to tendency of countries to produce goods of their specialisation & trade them with each other , rather than each country producing each good.

It leads to increase in productivity from knowledge specialisation, based on advantage (absolute, comparative) based production. It also makes people better off, increase in welfare due to choice expansion among differing preferences.

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3 years ago
What journal should a company uses to capture cash transactions?
alexira [117]
I think it is (The Cash<span> Payments </span><span>Journal)  

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Complete the following sentence. Given that total revenue = price x quantity, a reduction in price will lead to an increase in t
ycow [4]
Elastic.
This is the formula for elasticity:
Elasticity = (Quantity variation/Quantity)/(Price variation/Price)
Inelastic demand is the one in which a variation in price doesn’t lead to an important variation in the quantity bought by consumers. So, in the formula, numerator is much smaller than denominator, so the fraction is lower than 1. That happens with necessary goods (typically, food).
On the contrary, elastic demand is the one in which a variation in the price leads to an important variation in the quantity bought by consumers, and that means the fraction is higher than 1. So if I sell the product at a lower price, I will sell much more product.
Considering the formula: R = P*Q, when demand is elastic, I will have much more sold quantity with just a little lower price, which leads to a higher revenue.
3 0
3 years ago
Read 2 more answers
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