Microhard has issued a bond with the following characteristics: Par: $1,000 Time to maturity: 21 years Coupon rate: 9 percent Semiannual payments Calculate the price of this bond if the YTM is 6% (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.):
Answer:
Price of bond = $982.63
Explanation:
<em>The value of the bond is the present value (PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV).
</em>
Value of Bond = PV of interest + PV of RV
The value of bond for Microhard can be worked out as follows:
Step 1
PV of interest payments
Semi annul interest payment
= 9% × 1000 × 1/2
= 45
Semi-annual yield = 6%/2 = 3
% per six months
Total period to maturity (in months)
= (2 × 21) = 42 periods
PV of interest =
45 × (1- (1+0.03)^(-21)/0.03)= 693.6
Step 2
PV of Redemption Value
= 1000 × (1.03)^(-21×2)
=288.95
Price of bond
= 693.6 + 288.95
=982.63
Price of bond = $982.63
Answer: B. Maintaining a steady dividend is a key goal of most dividend-paying companies.
Explanation:
Companies that pay dividends prefer in general, to maintain a steady dividend overtime. This does not necessarily mean that they will pay the same amount of dividend but rather that they will pay out dividends as within a certain percentage range of the net income.
Companies do not prefer to cut dividends so as not to send the wrong message so A is wrong. Share repurchases reduces agency costs so C is wrong. Short term fluctuations in cash flow are not the key favor in determining dividend policy as the company might still pay out the same regardless so this is wrong as well. Option B is the best answer.
Answer: Lack of control over valuable assets
Explanation: In simple words, vertical integration refers to a process under which an organisation combines two or more stages of production which were previously performed by any other company.
The vertical integration is done where the company wants to get more hold on its supply chain with the ultimate objective of having better control over valuable assets.
Hence from the above we can conclude that the correct option is C.
Answer:
b. $290,000
Explanation:
The computation of the cash flows from operating activities to be reported on the statement of cash flows is shown below:
= Net income reported on the income statement + decrease in account receivable
where,
Net income reported = $280,000
And, the decrease in account receivable is $10,000 ($70,000 - $80,000)
So, the cash flow from operating activities
= $280,000 + $10,000
= $290,000
The decrease in account receivable implies that more cash is come so it would be added and the same is shown above
Answer:
b
Explanation:
There are two types of forecasting method
1. Qualitative forecasting
2. Quantitative forecasting
Qualitative forecasting can be described as when subjective judgement or non quantifiable information in forecasting.
<em>When is qualitative forecasting suitable ?</em>
- It is used when historical data in unavailable.
- this method is suitable when it is predicted that future result would depart from what historical data may suggest
<em>Advantages of Qualitative forecasting </em>
- it is flexible
- It can be used when data available is ambiguous or unclear
<em>Disadvantage of Qualitative forecasting </em>
It is subjective.
Quantitative forecasting can be described as forecasting using historical data
