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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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2 years ago
The big issue in the Palsgraf case was:_________
liubo4ka [24]

Answer: d) whether LIRR is liable under negligence to Mrs. Palsgraf.

Explanation:

Palsgraf v. Long Island Railroad Co. was a very famous case in American tort law from 1928 which deals with the issue of being liable to an unforeseen Plaintiff.

In the case, Helen Palsgraf and her daughter were at the Long Island Railroad Co. (LIRR) station platform waiting to board a train to go to the beach when two men were being assisted to enter the train by Employees of LIRR. Whilst this was happening one of the men dropped a product that detonated. This hit her and she began to stammer. She sued the railroad and won in two courts until she got to the New York Court of Appeals where she lost the case as the Judge did not believe the Issue was right.

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6 0
3 years ago
Breed Products has performed extensive studies on its costs and production and estimates the following annual costs based on 150
mafiozo [28]

Answer:

(a) $8.20

(b) $1,125,000

(c) 125,000

Explanation:

(a) Unit selling price:

= (Total cost incurred + Desired profit) ÷ Number of units sold

= ($630,000 + $600,000) ÷ 150,000

= $8.20

(b) Profit = Dollar sales - Variable cost - Fixed cost

($ sales × 20% profit) = $ sales - ($ sales × 60%) - $225,000

($ sales × 20% profit) = ($ sales × 40%) - $225,000

$225,000 = ($ sales × 40%) - ($ sales × 20% profit)

$225,000 = ($ sales × 20%)

Dollar sales = $225,000 ÷  20%

                    = $1,125,000

(c) No. of units required to be sold:

= Dollar sales ÷ Selling price per unit

= $1,125,000 ÷ $9

= 125,000

4 0
3 years ago
PLEASE HELP THERE ARE TWO SCENARIOS
rosijanka [135]

It is correct to state that the Fed will address the scenario with expansionary policy.

<h3>What is an expansionary policy?</h3>

An expansionary policy is one that seeks to increase the amount of money  so that aggregate demand can be stimulated.

<h3>What is a specific monetary action the Fed might use in this scenario? Identify the tool and how the Fed would use it. Explain how this would address the scenario.</h3>

When money is injected into the economy using tools such as

  • Lower interest rates
  • Lower Bank Reserves etc., demand is stimulated.

<h3>What is a specific fiscal action that Congress might use in this scenario?</h3>

Examples of fiscal polices that the congress might enlist for deployment in this scenarios are:

  • Government spending; and
  • Tax regulation.

To increase aggregate demand, Government will inject more money in to the economy by buying back bonds or embarking on projects at the state and local levels.

Reduction of taxes will also help put more money in the hands of people, thus increasing aggregate demand.

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6 0
1 year ago
Keesha Co. borrows $165,000 cash on November 1, 2017, by signing a 180-day, 11% note with a face value of $165,000. On what date
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Answer:

Explanation:

Principal amount $165000

Rate - 11%

time - 180

Interest = 165000*0.11=$18150

Total Maturity = 165000*0.11*180/365= 8950.68

Interest Expense for year 2017 = 165000*0.11*61/365 = 3033

Interest Expnese for year 2018 = 165000*0.11*119/365 = 5917

Ans. April 28, 2018

8 0
3 years ago
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