Answer:
c. 1.5%
Explanation:
Food as total Expenditure of Country = 15%
Food's Price rise = 10%
while other components of the price index remain constant price index rise will be calculated as follows:
Price index rise = 15% x 10%
Price index rise = 0.15 x 0.1
Price index rise = 0.015
Price index rise =1.5%
So the correct option is c. 1.5%
Soup + Salad = 5.50
Soup = Salad + 1
Subtitute both formulas into:
Salad + 1 + Salad = 5.50
2 Salad = 4.50
Salad = $ 2.25
= 225 cents
Winston Baker will put $25,000 into his sister's new spa. In six years, he will have tripled his investment. Winston has been promised a 20% rate of return.
<h3>What is meant by Rate of returns?</h3>
- The annual rate of return is the percentage change in an investment's value. For instance, if you assume a 10% annual rate of return, you are assuming that the value of your investment will rise by 10% each year.
- A rate of return (RoR) is the net gain or loss of an investment over a given time period expressed as a percentage of the initial cost of the investment.
- When you calculate the rate of return, you are calculating the percentage change from the beginning to the end of the period. ROI is calculated by subtracting the initial cost of the investment from the final value, dividing the result by the cost of the investment, and finally multiplying it by 100.
To learn more about Rate of returns, refer to:
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Answer:
The value per bond must be $1000
Explanation:
The reason is that the short term investments must be valued at current fair market value which is $1000 per bond today so the perceived value of the unit bond which is $1200 per bond is irrelevant here.
The amount recorded = Number of bonds * Current market value
The amount recorded = 250 * $1000 = $250,000
Answer: 5.52%
Explanation:
Given the following :
Face value (f) = $1000
Bond price(p) = 96% of face value = 0.96 × 1000 = $960
Coupon rate = 5% Semi-annually = 0.05/2 = 0.025
Payment per period (C) = 0.025 × 1000 = $25
Period(n) = 10 years = 10 × 2 = 20
Semiannual Yield to maturity = [(((f-p)/n) + C) / (f + p)/2]
Semiannual YTM = [(((1000 - 960) / 20) + 25) / (1000 + 960)/2]
Semiannual Yield to maturity = [(((40 /20) + 25) / 1960/2]
= (2 + 25) / 980
= 27 / 980 = 0.02755 = 2.755% = 2.76%
Pretax cost of debt = Yield to maturity = 2 × Semiannual yield to maturity
Pretax cost of debt = 2 × 2.76% = 5.52%
