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mina [271]
3 years ago
8

A company issued 5%, 20-year bonds with a face amount of $60 million. The market yield for bonds of similar risk and maturity is

6%. Interest is paid semiannually. At what price did the bonds sell? (
Business
1 answer:
Lesechka [4]3 years ago
7 0

Answer:

Total $53.0656 (millions)

Explanation:

We will need to add the present value of the coupon payment

and the present value of the maturity date

<u>present value of the annuity:</u>

C \times \frac{1-(1+r)^{-time} }{rate} = PV\\

C= 60 million x 5% /2 1.5

time= 20 years 2 payment per year = 40

rate = 6% annual = 0.06/2 = 0.03 semiannually

1.5 \times \frac{1-(1+0.03)^{-40} }{0.03} = PV\\

PV $34.6722

<u>present value of the bonds:</u>

\frac{Maturity}{(1 + rate)^{time} } = PV

Maturity 60

time 40

rate           0.03

\frac{60}{(1 + 0.03)^{40} } = PV

PV        $18.3934

<u>The value of the bond will be the sum of both</u>

PV c $34.6722

PV m  $18.3934

Total $53.0656

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allochka39001 [22]

No entries shall be allowed for district meets which are not submitted to the director on or before the fifth day before the first day of the meet.

<h3><u>What is the role of a director?</u></h3>
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In order to encourage good governance and guarantee that each director acts in the interests of the company's stakeholders, the legally based director duties were created. 

Know more about Directors with the help of the given link:

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8 0
1 year ago
Jones company lends Alabater Inc. $85,000 on August 6, 2018. This loan was memorialized with a signed note receivable with a rep
Tju [1.3M]

Answer:C) $2,125.

Explanation:

Interest = Principal x rate x time (period)

using days in a year = 360 days

Interest = $85,000 X 10% x 90/360

=$2,125

Therefore, Alabaster Inc, must repay the $85,000 principle and $2,125 in interest

8 0
3 years ago
Kwan wants to open a new business in his own country, Singapore. He has decided on a form of licensing that will provide him wit
Sidana [21]

Answer:

A

Explanation:

Direct sales

3 0
3 years ago
In 2016, Raleigh sold 1,000 units at $500 each, and earned net income of $40,000. Variable expenses were $300 per unit, and fixe
labwork [276]

Answer:

1,118 units.

Explanation:

The computation of number of units to be sold is shown below:-

For the Year 2016

Number of Units Sold = 1,000 units

Unit selling price = $500 per unit

Total Sales = $500 × 1,000 = $500,000

Variable Costs = $300 × 1,000

= $300,000

Contribution = $500,000 - $300,000

= $200,000

Fixed Costs = $160,000

Net Income = $200,000 - $160,000

= $40,000

For the Year 2017

Unit Selling Price = $500 per unit

Unit Variable Cost = $300 × 1.10

= $330 per unit

Contribution per unit = $500 - $330 = $170 per unit

Fixed Cost = $160,000 - $10,000 = $150,000

Now, to maintain the same income of $ 40,000 the Company have a total contribution

$150,000 + $40,000

= $190,000

Number of units to be sold = Total contribution ÷ Contribution per unit

= $190,000 ÷ $170

= 1,117.64

or

1,118 units.

4 0
3 years ago
In an open-market operation, the Fed buys $10 million of government bonds from individual investors. If the required reserve rat
Fittoniya [83]

Answer:

$100 million ; $10 million

Explanation:

Required reserve ratio (r) = 10%

Worth of bond = $10,000,000

The smallest increase can be thought of as being the $10million generated from open market operation and could be held by the bank as reserve.

To calculate the largest increase in deposit:

Money multiplier * deposit (worth of bond)

Money multiplier = (1 / reserve ratio)

Money multiplier = (1 / 0.1) = 10

Increase in deposit = 10 * $10,000,000 = $100,000,000 ( $100 million)

6 0
3 years ago
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