Select the correct answer.

AB Builders, Inc., has 18-year bonds outstanding with a par value of $2,000 and a quoted price of 102.037. The bonds pay interes

I am Lyosha [343]

Answer:

6.82%

Explanation:

In this question we use the PMT formula that is shown on the attachment below:

Given that,

Present value = 102.037% × $2,000 = $2,040.74

Future value = $2,000

Rate of interest = 6.62% ÷ 2 = 3.31%

NPER = 18 years 2 = 36 years

The formula is shown below:

= PMT(Rate;NPER;-PV;FV;type)

The present value come in negative

So, after solving this, the monthly payment is $68.15

Now the coupon rate is

= PMT ÷ face value × 2

= $68.15 ÷ $2,000 × 2

= 6.82%

8 0

3 years ago

Account A pays 13.8% interest per year. Account B pays 13.5% interest per year, compounded monthly. Account C pays 13% interest

alexandr1967 [171]

Answer:

1. Future value (FV) = $4,717

2. Future value (FV) = $5,189

3. Future value (FV) = $5,237

Explanation:

Requirement 1

Assume that the present value of the investment is $1,000.

We know, Compounding yearly,

FV = PV*(1 + i)^n

Given,

Present value (PV) = $1,000

Interest rate, i = 13.8% = 0.138

number of periods, n = 12 years

We have to calculate the future value of the investment.

Therefore,

FV = $1,000 × $(1 + 0.138)^{12}$

or, FV = $1,000 × $1.138^{12}$

or, FV = $1,000 × 4.7174

Therefore, Future value (FV) = $4,717

Requirement 2

Again, Assume that the present value of the investment is $1,000.

We know, Compounding monthly,

FV = PV × $(1 + \frac{i}{m})^{m*n}$

Given,

Present value (PV) = $1,000

Interest rate, i = 13.8% = 0.138

number of periods, n = 12 years

compounding period (monthly), m = 12

We have to calculate the future value of the investment.

Therefore,

FV = $1,000 × $(1 + \frac{0.138}{12})^{12*12}$

or, FV = $1,000 × $(1 + 0.0115)^{144}$

or, FV = $1,000 × $1.0115^{144}$

or, FV = $1,000 × 5.1890

Therefore, Future value (FV) = $5,189

Requirement 3

Again, Assume that the present value of the investment is $1,000.

We know, Compounding daily,

FV = PV × $(1 + \frac{i}{m})^{m*n}$

Given,

Present value (PV) = $1,000

Interest rate, i = 13.8% = 0.138

number of periods, n = 12 years

compounding period (daily), m = 365

We have to calculate the future value of the investment.

Therefore,

FV = $1,000 × $(1 + \frac{0.138}{365})^{365*12}$

or, FV = $1,000 × $(1 + 0.000378)^{4,380}$

or, FV = $1,000 × $1.000378^{4380}$

or, FV = $1,000 × 5.2367

Therefore, Future value (FV) = $5,237

4 0

4 years ago

A Stove Can be bought on hire purchase by making a deposit of $750

KiRa [710]

Answer:

$3,525.00

Explanation:

The hire purchase price will be the sum of the deposit and the total monthly installments.

The deposit is $750

Monthly installments =monthly fee multiplied by 15 months

=$185 x 15

=$2,775.00

Hire purchase cost will be

=$2,775.00 +$750

=$3,525.00

7 0

4 years ago

The planned elimination of many workers in order to enhance the organization's competitiveness is known as _____ and is often th

Romashka-Z-Leto [24]

Hello !

Answer:

The planned elimination of many workers in order to enhance the organization's competitiveness is known as <u>downsizing</u> and is often the result of a firm wanting to reduce its costs or because technology has replaced its need for labor.

3 0

2 years ago

A firm has sales of $690, EBIT of $300, depreciation of $40, and fixed assets increased by $265. If the firm's tax rate is 40 pe

icang [17]

Answer:

-$45

Explanation:

Given that,

Sales = $690

EBIT = $300

Depreciation = $40

Tax rate = 40%

Fixed assets increased by $265.

Firm's free cash flow:

= Earnings after tax + Depreciation - Capital Expenditure

= [EBIT × (1 - Tax rate)] + $40 - $265

= [$300 × (1 - 0.40)] + $40 - $265

= $180 + $40 - $265

= -$45

Therefore, the firm's free cash flow -$45.

3 0

3 years ago