ILL GIVE BRAINLIEST!! HELP ASAP!!

An investor is contemplating the purchase of a 20-year bond that pays $50 interest every six months. the investor plans to hold

irinina [24]

Answer: The investor should be willing to pay <u>$927.68 </u>for the bond today.

We in need to compute the price at which the investor can sell the bond in year 10 (Y10).

The price of the bond in year 10 will be the present value of the coupons over the remaining life of the bond and the maturity value of the bond after 20 years.

We have

Coupon Value (C ) $50.00

No. of coupons remaining (n) 20

Expected YTM in year 10 0.08

Expected semi annual YTM in year 10 $\frac{0.08}{2} =0.04$

Face (Maturity) Value of the bond (MV) $1,000.00

The bond price in year 10 will be

$\mathbf{Bond Price_{Y10}=C*\left ( \frac{1-(1+r)^{-n}}{r}\right )+\frac{MV}{(1+r)^{n}}}$

Substituting the values we get,

$Bond Price_{Y10}=50*\left ( \frac{1-(1+0.04)^{-20}}{0.04}\right )+\frac{1000}{(1+0.04)^{20}}$

$Bond Price_{Y10}=50*\left (13.59\right )+\frac{1000}{2.19}$

$\mathbf{Bond Price_{Y10}= 679.52+ 456.39 = 1,135.90}$

<u>Hence the investor can expect to sell the bond in year 10 at $1,135.90.</u>

Now, we'll calculate the price the investor is willing to pay for the bond. The investor can expected to pay the Present Value of the coupons she'll receive over 10 years and the selling price of the bond 10 years from now. We discount the cash flows at the rate of return the investor expects.

We have

Coupon Value (C ) $50.00

No. of coupons remaining (n) 20

Expected rate of return 0.12

Expected semi annual rate of return $\frac{0.12}{2} =0.06$

Selling Price of the bond (SP) $1,135.90

$\mathbf{Bond Price=C*\left ( \frac{1-(1+r)^{-n}}{r}\right )+\frac{SP}{(1+r)^{n}}}$

Substituting the values we get,

$Bond Price=50*\left ( \frac{1-(1+0.06)^{-20}}{0.06}\right )+\frac{1000}{(1+0.06)^{20}}$

$Bond Price=50*\left (11.47\right )+\frac{1000}{3.21}$

$\mathbf{Bond Price= 573.50+ 354.18 = 927.80}$

4 0

3 years ago

The income statement for the month of June of Camera Obscura Enterprises contains the following information: Sales Revenues $7,0

Ivahew [28]

Answer:

a debit balance of $1,300

Explanation:

Generally in the income statement, a net profit is the excess of income over expenses during a given period and this will give a credit balance in the income statement, but this will be a debit balance in Income Summary to close the account.

On the other hand, a net loss is the excess of expenses over income during a given period and this will give a debit balance in the income statement, but this will be a credit balance in Income Summary to close the account.

Since Camera Obscura Enterprises made a net profit of $1,300 in the month of June, the balance in Income Summary will therefore be a debit balance of $1,300.

4 0

4 years ago

Zhang Industries sells a product for $750. Unit sales for May were 400 and each month's sales are expected to grow by 3%. Zhang

Colt1911 [192]

Answer:

Total= $292,520

Explanation:

Giving the following information:

Zhang Industries sells a product for $750. Unit sales for May were 400 and each month's sales are expected to grow by 3%. Zhang pays a sales manager a monthly salary of $4,000 and a commission of 2% of sales in dollars. Assume 30% of Zhang's sales are for cash. The remaining 70% are credit sales; these customers pay in the month following the sale.

Cash budget for June:

Sales= [(400*1.03)*750]*0.3= 92,700

Sales from May= (400*750)*0.7= 210,000

Salary= (4,000)

Commision= [(400*1.03)*750]*0.02= (6,180)

Total= $292,520

6 0

4 years ago

Some recent financial statements for Smolira Golf, Inc., follow.SMOLIRA GOLF, INC.Balance Sheets as of December 31, 2013 and 201

Natasha_Volkova [10]

Answer:

2014 2013

Short-term solvency ratios

CURRENT RATIO 4,25 4,87

QUICK RATIO 1,59 1,79

CASH RATIO 0,50 0,66

Asset utilization ratios

ASSETS TURNOVER TIMES 1,76 -

INVENTORY TURNOVER 9,67 -

ACC REC. TURNOVER 36,88 -

Long-term solvency ratios

TOTAL DEBT-ASSETS RATIO 16,20% 18,46%

TOTAL DEBT-EQUITY RATIO 26,48% 30,96%

EQUITY MULTIPLIER RATIO 1,26 1,31

TIMES INTEREST EARNED RATIO 44,91 -

CASH COVERAGE RATIO 0,50 0,66

Profitability ratios

PROFIT MARGIN 19,19% -

RETURN ON ASSETS 33,70% -

RETURN ON EQUITY 42,63% -

Explanation:

8 0

4 years ago

What happens when supply goes down, economics,effects,business?

I am Lyosha [343]

Supply of goods and services can go down.The needs and demands of people are unlimited and there are limited resources.So it is common that supply can go down anytime.In this case it not only effects the business but also the people cant be able to fulfil their wants and deires.There will be problems in the economic growth in the country.There will be rising poverty , unemployment if it lasts for too long.

6 0

3 years ago