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Gre4nikov [31]
3 years ago
6

Hydro Systems has bonds outstanding with a face value of $1,000, 13 years to maturity, and a coupon rate of 6.5 percent, paid an

nually. What is the company's pretax cost of debt if the bonds currently sell for $1,056?
a. 5.87 percent
b. 6.42 percent
c. 4.71 percent
d. 5.36 percent
e. 5.55 percent
Business
1 answer:
Anni [7]3 years ago
5 0

Answer:

a. 5.87 percent

Explanation:

Annual coupon = 1000*6.5%  = $65

Yield to maturity = [Annual coupon + (Face value-Present value)/time to maturity] / (Face value+Present value)/2

Yield to maturity = [65 + (1000-1,056)/13] / (1000+1,056) / 2

Yield to maturity = [65 + (-56/13)] / 2056/2 ]

Yield to maturity =  {65 - 4.31] / 1028

Yield to maturity = 60.69 / 1028

Yield to maturity = 0.0590369649805447

Yield to maturity = 5.90%

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kicyunya [14]

a. Nominal interest rates Increase and Aggregate demand Decrease

b. New Fed policy Buy bonds

Explanation:

When contemplating unemployment, the nominal interest rate applies to the rate of interest. Net may, without taking into consideration any commissions or compounded interest, be related to the advertised or reported interest rate of a loan.

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3 years ago
A customer value proposition is a unique strength relative to competitors that provides superior returns, often based on quality
balu736 [363]

<u>Product Protocol is a statement that, before product development begins, identifies (1) a well-defined target market; (2) specific customers' needs, wants, and preferences; and (3) what the product will be and do to satisfy consumers</u>

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<u />

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4 0
3 years ago
"A forklift will last for only 2 more years. It costs $5,000 a year to maintain. For $20,000 you can buy a new lift that can las
BabaBlast [244]

Answer:

a. $2,465.82

b. $3,539.68

c. Yes, we should

Explanation:

Annual cost to maintain old forklift is $5,000

Equivalent Annual Cost (EAC) of new forklift = (Asset price x discount rate)/(1-(1+discount rate)-n), in which n is the number of year for usage of this forklift?

If discount rate is 4% per year, the EAC of new forklift is $2,465.82  

= ($20,000x4%)/(1-(1+4%)-10)

If discount rate is 12% per year, the EAC of new forklift is $3,539.68  

= ($20,000x12%)/(1-(1+12%)-10)

We should replace because with such above discount rate, the old forklift is more costly than the new one

5 0
3 years ago
Laura mentions that employees will come back from tea break on time because they know it will let down their fellow work mates i
cupoosta [38]

Answer:

Cooperation and trust

Explanation:

There are clear distinctions between groups and teams. A group is a set of people brought together by common interests and inevitable circumstances, while a team is a group of people working together to reach a common goal.

The responsibility in a team is evenly dispersed; although the work is not done individually, the team is acting as an individual. That means that <em>trust </em>has to be present among team members; we have to know we won't be let down by a team member, like we don't let down ourselves.

<em>Trust</em> is one of the most essential inputs for effective <em>cooperation</em>.  

A team possessing such characteristics is highly <em>cohesive</em>.

6 0
3 years ago
A company has preferred stock with a current market price of $18 per share. The preferred stock pays an annual dividend of 4% ba
scZoUnD [109]

Answer:

Answer:

Dividend (D) = 4% x $100 = $4

Current market price (Po) = $18

Flotation cost (FC) = $1.50

Tax rate (T) = 40% = 0.40

Kp =   <u> D </u>

       Po-FC

Kp =   <u>  $4 </u>

        $18-$1.50

Kp = <u>$4 </u>

      $16.5

Kp = 0.24 = 24%

Explanation:

Cost of preferred stock equals dividend divided by the difference between current market price and flotation cost. Cost of preferred stock is not tax deductible.

3 0
3 years ago
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