The rate of return required by investors in the market for owning a bond is called the <u>Yield to </u><u>maturity</u>
A bond's coupon rate is the rate it pays each year, and yield is the return it makes. A bond's coupon is expressed as a percentage of its face value. Face value is simply the face value of the bond or the value of the bond as quoted by the issuer.
A bond's current yield is the annual income from the investment, including interest and dividend payments, divided by the security's current price. Yield to maturity (YTM) is the expected total return from holding a bond to maturity.
The current yield is the annual rate of return on investment (interest or dividend) divided by the security's current price. This indicator looks at the current price of a bond rather than its face value.
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Answer:
d) <u>cash flow</u>
Explanation:
Small businesses are characterized by limited scale of operations and small quantum of revenues. Thus, small businesses in their initial stages have to deal with the common problem of shortage of funds owing to delay in receipts from debtors owing to relaxed credit terms.
The receipts are not received on time while the expenses accumulate which leads to a situation of cash crunch wherein it gets difficult to meet expenses and liabilities.
Thus, to avoid such situations businesses have to consider their credit policies and credit allowing limit so as to ensure enough cash to meet day to day working capital requirements.
This points towards being careful of cash inflows and outflows and efficient management of cash flows, keeping check on receipts and payments to ensure smooth operations.
Efforts by the federal reserve bank to control the money supply and interest rates are known as monetary policies.
Answer:
False
Explanation:
The first part was true. A higher WACC results in a lower NPV simply because a higher discount rate results in a lower present value.
E.g. 100 / (1 + 6%)³ = 83.96, but if we increase r to 10%, then 100 / (1 + 10%)³ = 75.13
The second part is wrong because under the IRR method, the decision rule is very simple, all projects are accepted if their IRR is higher than the project's WACC (or discount rate). I.e. if hte project's WACC increases, so does the chance of the project being rejected because the IRR might be lower than the WACC.
Answer:
Part (a)
Buying of land would be smart thought if the net present estimation of advantage is at any rate equal to or more prominent than the present estimation of cost of land.
Net present estimation of land = 
= $1,825,592.54
The expense of land is anyway $2,000,000. The net present expense of land is more noteworthy than the advantages. Subsequently it isn't a good thought to purchase the land.
Part (b)
The maximum sum that ought to be paid ought to be equivalent to the net present estimation of advantages, for example $1,825,592.54.
Part (c)
If the entertainment benefits increment by 3 years then the net present estimation of advantages for a long time would be:
= ![\frac{100,000 * [ 1 - (1.03/1.05)^{50} ] }{(0.05-0.03)}](https://tex.z-dn.net/?f=%5Cfrac%7B100%2C000%20%2A%20%5B%201%20-%20%281.03%2F1.05%29%5E%7B50%7D%20%20%5D%20%7D%7B%280.05-0.03%29%7D)
=$3088535.28
The land should be purchased since the present estimation of advantages is more prominent than cost.
