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puteri [66]
3 years ago
15

A 10-year, 9.00%, $3,000 bond that pays dividends quarterly can be purchased for $2,775. This means that $2,775 is spent on the

bond now. Every quarter, $67.50 is provided to the purchaser as to the dividend. After 10 years, $3,000 is given to the purchaser. If the bond is purchased and pays as scheduled, which of the following ranges of effective rate of return will the purchaser receive?
a. 10.2% - 11.2%
b. 9% - 9.5%
c. 11.21% - 13.21%
d. 9.5% - 9.95%
Business
1 answer:
Rainbow [258]3 years ago
3 0

Answer:

The range of effective rate of return that the purchaser will receive would be between 10.2% - 11.2%. The right answer is a

Explanation:

According to the given data we have the following:

Quarterly dividend = $67.50

Buy price = $2,775

Maturity = 10 yrs = 10*4 = 40 quarters

Face value = $3000

Hence, PW = -2775 + 67.50 * (P/A,i%,40) + 3000*(P/F,i%,40) = 0

67.50 * (P/A,i%,40) + 3000*(P/F,i%,40) = 2775

Therefore, using trail and error method

When i = 2.5%, value of 67.50 * (P/A,i%,40) + 3000*(P/F,i%,40) = 2811.729

When i = 3%, value of 67.50 * (P/A,i%,40) + 3000*(P/F,i%,40) = 2479.917

And by using interpolation

i = 2.5% + (2811.729-2775) / (2811.729-2479.917) *(3-2.5)

i = 2.5% + 0.05534%

i = 2.555%

Nominal yeild = 2.555% * 4 = 10.22%

Effective yeild = (1+0.02555)^4 - 1 = 0.10618 = 10.62%

The range of effective rate of return that the purchaser will receive would be between 10.2% - 11.2%

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Answer:  3.50 years

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Formula is;

= Year before payback + Cash remaining till payback/ Cash inflow in year of payback

Year 1 Net Cash Inflow

= Cash Inflow - Cash Outflow

= 30,000 - 12,000

= $18,000

Year 2

= 45,000 - 20,000

= $25,000

Year 3

= 60,000 - 25,000

= $35,000

Year 4

= 50,000 - 30,000

= $20,000

Year 1 + 2 + 3

= 18,000 + 25,000 + 35,000

= $78,000

Amount remaining till payback

= Investment - Cash inflow so far

= 88,000 - 78,000

= $10,000

= Year before payback + Cash remaining till payback/ Cash inflow in year of payback

= 3 + 10,000/20,000

= 3.50 years

8 0
3 years ago
The following revenue and expense account balances were taken from the ledger of Guardian Health Services Co. after the accounts
vekshin1

Answer:

                             Guardian Health Services Co.

           Income Statement for the year ended February 28, 20Y0

                                                                        $                        $

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Cost of Goods sold

      Supplies Expense                                                         <u>    4,180</u>

Gross Profit                                                                          329,920

Operating expense

      Utilities Expense                                   26,800

      Wages Expense                                  262,700

      Depreciation Expense                            17,400

      Insurance Expense                                  8,530

      Miscellaneous Expense                           6,790

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Explanation:

The income statement is a statement that shows the net profit or loss of a business for a period end. It shows the income made and expenses incurred in the course of a given period.

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2 years ago
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3 years ago
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Arlecino [84]

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A. religious precepts

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D, societal culture and norms.

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baherus [9]

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  • credit of $30,000, overapplied.

<h3>Underapplied Overhead vs. Overapplied Overhead</h3>

Underapplied overhead is the opposite of overapplied overhead. Overapplied overhead occurs when expenses incurred are actually less than what a company accounts for in its budget. This means that a company comes in under budget and achieves a lower amount of overhead costs during the accounting period.

Therefore, the correct answer is as given above.

learn more about overhead account from here:

brainly.com/question/26396695

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