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andrew11 [14]
3 years ago
9

Global Exporters wants to raise $31 million to expand its business. To accomplish this, it plans to sell 20-year, $1,000 face va

lue, semiannual coupon bonds. The bonds will be priced to yield 7.75 percent and coupon rate of 6.2 percent. What is the minimum number of bonds it must sell to raise the money it needs
Business
1 answer:
yanalaym [24]3 years ago
6 0

Answer:

Min number required = 36742.44878 rounded off to 36743 bonds

Explanation:

To calculate the minimum number of bonds that must be sold, we first need to calculate the bonds price.

To calculate the price of the bond today, we will use the formula for the price of the bond. We assume that the interest rate provided is stated in annual terms. As the bond is a semi annual bond, the coupon payment, number of periods and semi annual YTM will be,

Coupon Payment (C) = 1,000 * 0.062 * 6/12  = $31

Total periods (n) = 20 * 2 = 40

r or YTM = 0.0775 * 6/12 = 0.03875 or 3.875%

The formula to calculate the price of the bonds today is attached.

Bond Price = 31 * [( 1 - (1+0.03875)^-40) / 0.03875]  + 1000 / (1+0.03875)^40

Bond Price = $843.7107767 rounded off to $843.71

The bonds will sell at a price of $843.71 today.

So the minimum number of bonds that must be sold is,

Min number required = 31,000,000 / 843.7107767

Min number required = 36742.44878 rounded off to 36743 bonds

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Delilah purchased a wheelchair with an installment loan that has an APR of 18 percent. The wheelchair sells for $2,007. The stor
alukav5142 [94]

Answer:

$748.48

Explanation:

Cost of wheelchair = $2,007

Down payment = Cost of wheelchair*20% = $2,007*20% = $401.40

Amount of finance = Cost of wheelchair - Down payment = $2,007 - $401.40 = $1,605.60

Interest rate = 18% * 1/12 = 1.5%per month

Term = 54 month

Monthly payment = Amount of finance*I/[1-(1+I)^-n]

Monthly payment =  $1,605.60*1.5%/[1-(1+1.5%)^-54]

Monthly payment = $1,605.60*1.5%/[1 - 0.447541]

Monthly payment = $1,605.60*0.015/0.55246

Monthly payment = $43.59411

Total amount paying for loan over a period = Monthly payment * Term = $43.59411 * 54 = $2354.08

Amount of finance charge = Total amount paying for loan - Amount of loan

Amount of finance charge = $2354.08 - $1,605.60

Amount of finance charge = $748.48

5 0
3 years ago
A food manufacturer reports the following for two of its divisions for a recent year.
Over [174]

Answer and Explanation:

1. Return on investment is

= Operating Income ÷ Average invested Assets

here, average invested assets is

= (Invested assets, beginning + Invested assets, ending) ÷ 2

For Beverage Division

= $349 ÷ (($2,662 + $2,593) ÷ 2)

= $349 ÷ $2,628

= 13.28%

For Cheese Division

= $634 ÷ (($4,455 + $4,400) ÷ 2)

= $634 ÷ $4,428

= 14.32%

2. Profit margin = (Operating income ÷ sales) × 100

For Beverage Division

= ($349 ÷ $2,681) × 100

= 13.02%

For Cheese Division

= ($634 ÷ $3,925) × 100

= 16.15%

3. Investment turnover = Sales ÷ Average Operating Assets

For Beverage Division

= $2,681 ÷ (($2,662 + $2,593) ÷ 2)

= $2,681 ÷ $2,628

= 1.02 times

For Cheese Division, it would be

= $3,925 ÷ (($4,455 + $4,400) ÷ 2)

= $3,925 ÷ $4,428

= 0.89 times

6 0
3 years ago
Assume the corporate tax view of capital structure. Your unleveraged cost of capital is 13%. Your corporate tax rate is 30%. You
sergejj [24]

Answer:

C. 11.05%

Explanation:

The computation of the cost of capital under the proposed leveraging is shown below;

cost of capital is

=Debt÷ value of leverged firm × ((unlevered cost of capital × (1 - tax rate))

=800 ÷ 1600 × ((13% + (13%) × (1 - 30%)))

= 11.0500%

hence, the cost of capital is 11.05%

8 0
3 years ago
Going back to the original problem from question 3, Eli Orchid would like to make sure that at most 30% of all batches produced
oksano4ka [1.4K]
Please answer answer question answer answer me question answer question question answer answer please answer answer question answer answer me question answer please answer answer please thank lord lord please please thank you lord lord please thank you please thank lord please thank you lord please please thank you lord lord thank you please thank lord please thank you lord please please thank you lord lord thank you please thank lord please thank you lord please please thank you lord lord thank you please thank lord
3 0
3 years ago
Points out of 1.00 Not flaggedFlag question Question text From the lessee's perspective, in the first year of a lease,
Tasya [4]

Answer:

A) a finance lease will cause debt to increase, compared to an operating lease

Explanation:

3 0
3 years ago
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