The target income refers to the income planned for the future. The answer is letter C. This type of income is expected by the management at a given specified accounting period. This now would direct the key functions of the management in relation to the action that it will do to achieve the certain income.
Answer:
The YTM is less than 10%
Explanation:
If a coupon rate of a bond is greater than its yield to maturity (YTM), the bond is said to trade at a premium. The Bond's current price would be greater than its Face value
If a coupon rate of a bond is less than its yield to maturity (YTM), the bond is said to trade at a discount. The bonds current price would be less than its face value
In this Question, the bond's current price ($1,197.93) is greater than its face
($1,000) which means that the bond is trading at a premium. Therefore, we can conclude that the bond's YTM is less than its coupon payment. In this question the coupon rate is 10%, therefore the YTM should be less than 10%.
Answer:
the annual pre-tax cost of debt is 10.56%
Explanation:
the beore-tax component cost of debt will be the actual market rate of the bonds, as they offer an interest rate of 11% but are selling at 104 points not at par thus, there is a difference between the rates.
We solve for the rate which makes the coupon and maturity 104
with excel or a financial calculator
PV of the coupon payment
C 5.500 (100 x 11%/2)
time 60 (30 years x 2 payment per year)
rate <em>0.052787474</em>
PV $99.4338
PV of the maturity
Maturity 100.00
time 60.00
rate <em>0.052787474</em>
PV 4.57
<em><u>Adding both we should get 104 which is the amount the bonds is selling:</u></em>
PV coupon $99.4338 + PV maturity $4.5662 = $104.0000
The rate is generated using goal seek or wiht a financial calculator.
This rate is a semiannual rate, so we multiply by 2 to get the annual cost of debt:
0.052787474 x 2 = 0.105574947
The cost of debt for the firm is 10.56%
Answer:
B) fit for the ordinary purpose for which such goods are used.
Explanation:
An implied warranty of merchantability means that the products sold should fulfill an ordinary buyer's expectations and should be fit for the purpose intended.
All products carry an implied warranty of merchantability unless expressly disclaimed or identified as a sale "with all faults" or "as is".
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