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REY [17]
3 years ago
14

The 7 percent bonds issued by Modern Kitchens pay interest semiannually, mature in eight years, and have a $1,000 face value. Cu

rrently, the bonds sell for $1,032. What is the yield to maturity
Business
1 answer:
shtirl [24]3 years ago
8 0

Answer: 6.5%

The yield to maturity is 6.496% (approximated to 6.5% to nearest tenth)

Explanation:

Using the formula (semi annually YTM)

YTM = C + (fv - pv) /t ÷ (fv + pv)/2

C= coupon rate = 7%(1000)= $70

fv = face value = $1,000

pv = price value = $1,032

t = Time to maturity in years = 8years

C + (fv - pv) /t = 70 + (1000–1032)/8

= 70 – (32 /8) =66

(fv + pv) /2 = (1000 + 1032) /2

= 2032 / 2

= 1016

YTM = 66 / 1016

YTM = 0.06496

In % = (6496 / 100,000) × 100

= 6.496%

Approximately.... 6.5%

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3. Vocabulary test. Explain the differences between: a. Real and financial assets. b. Capital budgeting and financing decisions.
VikaD [51]

Answer:

The correct answer is:

a) A real asset is a Tangible Asset, Like a machine, a Land or a Building. Real Assets are used to generate resources and, therefore, produce changes in the financial situation of the company that owns them. While a financial asset on the other hand constitutes the right to collect an account in the future. In the case of companies, you can think of an account or document receivable; For natural persons, a financial asset can be a document that compares a plaque investment in a banking institution and that will produce a cash flow in the future.

b) Investment projects are independent, perfectly divisible, and the company can invest any amount of money in a project. Only investment opportunities existing at the present time and not future are considered.  While capital budgeting, it is a projection either in the short term or in the long term, and the reasons for making this budget are that:  Benefits from the point of view of administrative planning and control., an investment proposal must be judged in relation to whether it provides a return equal to or greater than that required by investors y the evaluation of projects through mathematical-financial methods.

c) When a corporation is established, its shares may be in the hands of a small group of investors, perhaps the company's administrators plus some sponsors. In this case, the shares are not sold to the public and the company is closed. Over time, if the company grows and new shares are issued to raise capital, these shares go public. The company becomes a public company.

d) Limited liability means that the liability of each partner's debt is limited to their investment in the business, that is, they cannot be held personally responsible for the debts of other parties, if the company is sued or forced to close, the Each partner's business assets may be liquidated, but his personal assets are safe. Furthermore, unlimited liability means that all parties are responsible for all debts of the company, regardless of how it was created. If a partner commits acts that cause the business to reconcile, all parties become part of the process, not just the partners whose actions caused the judgment.

8 0
3 years ago
An entrepreneur borrows $500,000 today. The interest rate is 11.5%. If the entrepreneur makes annual payments of $70,000 per yea
love history [14]

Answer:

After 18.44 year loan will be paid

Explanation:

We have given an entrepreneur borrows $500,000 today.

So total amount is $500000

Annual payment is of $70000

Rate of interest r = 11.5 %

We have to find the time period

We know that total amount is given by

A=P(1+\frac{r}{100})^n, here A is total amount , P is yearly paid amount, r is rate of interest and n is time period

So 500000=70000\times (1+\frac{11.25}{100})^n

7.142=1.1125^n

Taking log both side

log7.142=nlog1.1125

n\times 0.0463=0.8538

n = 18.44 year

So after 18.44 year loan will be paid

6 0
3 years ago
A document that authorizes a supplier to deliver a product or service is known as.
Alecsey [184]

Answer:

purchase order

Explanation:

a document that authorizes a supplier to deliver a product or service is known as a purchase order is the purchased cost of goods from outside suppliers cost of goods sold is used when requirements are well understood and there is common agreement between supply chain partners about what certain terms mean

6 0
2 years ago
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The last step of the human resource planning system is to: publish a human resource inventory listing the names, ages, job title
Anastaziya [24]

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The strategy employed by the company to keep a steady supply of qualified personnel while avoiding vacancies or surpluses in its workforce is human resources preparation. A successful HRP approach will mean a company's competitiveness and profitability.

The HRP process consists of four key steps:

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  • The balance of expected job demand and supply, and
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7 0
3 years ago
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ira [324]
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The answer is B: False
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3 years ago
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