All categories

3 years ago

2. Finding the Maturity You've just found a 10 percent coupon bond on the market that sells for par

Business

1 answer:

kirill [66]3 years ago

6 0

Answer and Explanation:

The computation of the maturity of the bond is as follows;

When the bond sales at par that means the future value is equivalent to the present value. Also the par value is considered as a future value and we assume the par value be $1,000. Also the coupon rate and the market rate is the same i.e. 10%

Now

Present value = $1,000

Future value = $1,000

PMT = 10% of $1,000 = $100

RATE = 10%

The formula is shown below:

= NPER(RATE;PMT;-PV;FV;TYPE)

The present value comes in negative

After applying the above formula, the maturity would be

As it shows #VALUE so it is not able to find therefore the maturity would be equal to the par value i.e. $1,000

You might be interested in

On January 1, Year 1, the Accounts Receivable balance was $29,700 and the balance in the Allowance for Doubtful Accounts was $3,

joja [24]

Answer:

C $26,200

Explanation:

Allowance for Doubtful Accounts is an contra account receivables account. It is adjusted in the account receivable balance to show the net receivable on the balance sheet. The write off entry is made to transfer deduct the balance of account receivable which is now uncollectible from the customers.

As per given date

January 1, year 1

Account receivable = $29,700

Allowance for Doubtful Accounts = $3,500

On January 15, Year 1 a write off is made as follow

Dr. Allowance for Doubtful Accounts $1,030

Cr. Account receivable $1,030

These balance are deducted from the account receivable balance and Allowance for Doubtful Accounts balance.

Account receivable = $29,700 - $1,030 = $28,670

Allowance for Doubtful Accounts = $3,500 - $1,030 = $2,470

Realizable Value of Account receivable = $28,670 - $2,470 = $26,200

5 0

3 years ago

Peppertree Company has two divisions, East and West. Division East manufactures a component that Division West uses. The variabl

Anika [276]

Answer:

$1.45

Explanation:

Data provided in the question

Variable cost per component = $1.45

Full cost = $1.91

Selling price per component = $4.95

By considering the above information, the lowest price that would be accepted for the component is equal to the variable cost per unit i.e $1.91 and plus the full cost includes both the variable and fixed cost plus the fixed cost would be recovered by normal sale also

So in this case we only considered the variable cost per component

3 0

3 years ago

EHealth Corporation has $1,000 par value bonds with 4 years to maturity. The bonds pay an 8% coupon rate with semi-annual coupon

Degger [83]

Answer:

Yield to Maturity(YTM) = 3.47%

Explanation:

<em>The yield to maturity is the required rate of return (discount rate) that would equate the price of the bond and cash outflow expected from the bond. The yield on the bond can be determined as follows using the formula below: </em>

YTM = C + F-P/n) ÷ 1/2 (F+P)

YTM-Yield to maturity-

C- coupon

F- Face Value

P- Current Price

DATA

Coupon = coupon rate × Nominal value = 1,000 × 8%× 1/2=40(note we divide by 2 because interest is paid semi-annually)

n= 4×2 = 8 (note there 2 half months in a year)

Face Value = 1000

YM-?, C-40, Face Value - 1,000, P-103.75/100× 1000 = 1037.5

YM = (40 + (1000-1037)/8) ÷ ( 1/2× (1000 + 1037.5 ) ) =0.0347

YM = 0.0347 × 100 = 3.47%

Yield to Maturity = 3.47%

5 0

3 years ago

How can producers maximize their profit? Check all that apply.

I am Lyosha [343]

Answer:

They can work to decrease their marginal cost.

They can raise prices to increase marginal revenue,

They can keep marginal costs below marginal revenues,

Explanation:

Marginal cost is the additional expense incurred by producing an extra unit. Marginal revenue is the extra profit realized by selling an additional product or service. To maximize profits, firms should stop selling and production activities when the marginal cost equal to marginal revenue. A profit-maximizing firm is profitable when marginal revenue is greater than or equal to marginal cost.

Profit is obtained by deducting expenses from revenue. To increase profits, a firm should put more effort into increasing revenues while minimizing costs. A profit-maximizing firm should, therefore, work hard to decrease marginal cost and improve its marginal revenue.

8 0

3 years ago

Neon Electronics Inc. sourced touch screens required for its tablet computers, cell phones, and televisions from a manufacturer

Nataly_w [17]

Answer:

C. backward vertical integration

Explanation:

Vertical integration is one in which the supply chain of a clothe producing company is owned by the

Backward integration is a type of vertical integration in which a firms starts to fill in the role it once designated to another in the manufacturing of its product. Backward vertical integration would see a company buying another to fulfill its needs as regarding production.

From the above question, it can be seen that due to the inability of the china firm to meet up with Neon Electronics Inc; it started to produce the touchscreens needed for the tablet computers.

Cheers.

3 0

4 years ago