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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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Sanford Corp. bought new technological systems to inspect the quality of products as they come off the production line. The expe
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C. Prevention cost

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B. Appraisal cost

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The reason is that the appraisal costs are incurred to assess that whether the investment will bring value to the organization in terms of customer loyalty, better cash positions, greater profitability, better quality, etc. The inspection of the quality of the production which also considers the cost of operating the system is actually considering the value the new technology system is generating and is appraisal cost to the company.

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4 years ago
Bold Company has fixed costs totaling $380,000 per month, the variable cost per unit is $100, and the selling price per unit is
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Answer:

9 units

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The contribution margin is the amount available per unit to meet fixed costs and profits. It is calculated by subtracting variable costs from selling price.

For Bold company, contribution margin is equal to selling price-  variable costs.

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<h3>What is monopolistically competitive?</h3>

An industry with a lot of companies offering similar (but not identical) replacement goods or services is known as one with monopolistic competition. In a monopolistic competitive industry, there are few barriers to entry and exit, and no firm's decisions directly affect those of its rivals.

Monopolistic competition is characterized by a number of features.

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