1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Andrei [34K]
2 years ago
7

Chamberlain Co. wants to issue new 17-year bonds for some much-needed expansion projects. The company currently has 12.2 percent

coupon bonds on the market that sell for $1,434.96, make semiannual payments, and mature in 17 years. What coupon rate should the company set on its new bonds if it wants them to sell at par
Business
1 answer:
almond37 [142]2 years ago
4 0

Answer:

The company should set the coupon rate on its new bonds at current yield to maturity of 4.81% if it wants them to sell at par.

Explanation:

There is a need to first calculate the yield to maturity (YTM) using the following RATE function in Excel:

YTM = RATE(nper,pmt,-pv,fv) * Number of semiannuals in a year =  RATE(nper,pmt,-pv,fv)*2 .............(1)

Where;

YTM = yield to maturity = ?

nper = number of periods = number of years to maturity * number of semiannuals in a year = 17 * 2 = 14

pmt = semiannual coupon payment = face value * (annual coupon rate / number of semiannuals in a year) = 1000 * (12.2% / 2) = 61

pv = present value = current bond price = 1434.96

fv = face value of the bond = 1000

Substituting the values into equation (1), we have:

YTM = RATE(14,61,-1434.96,1000)*2

Inputting =RATE(14,61,-1434.96,1000)*2 into excel (Note: as done in the attached excel file), the YTM is obtained as 4.81%.

Therefore, the company should set the coupon rate on its new bonds at current yield to maturity of 4.81% if it wants them to sell at par.

Download xlsx
You might be interested in
A company had the following purchases during its first year of operations:
Readme [11.4K]

Answer:

Ending inventory value= $9,127

Explanation:

Giving the following information:

January: 17 units at $127

February: 27 units at $137

May: 22 units at $147

September: 19 units at $157

November: 17 units at $167

<u>Using the specific identification method, we need to multiply each unit for its specific cost.</u>

<u></u>

Ending inventory:

January= 9*127= 1,143

February= 11*137= 1,507

May= 13*147= 1,911

September= 11*157= 1,727

November= 17*167= 2,839

Ending inventory value= $9,127

5 0
3 years ago
All the following are benefits of attending a community college except that
KengaRu [80]

Answer:

its easier to receive a bachelor's degree there.

5 0
3 years ago
Garida Co. is considering an investment that will have the following sales, variable costs, and fixed operating costs:
svlad2 [7]

Answer:

Garida Co.

The project's net present value (NPV) is:

= $57,787

Explanation:

a) Data and Calculations:

                                           Year 1       Year 2      Year 3      Year 4

Unit sales                           4,200         4,100       4,300        4,400

Sales price                       $29.82     $30.00      $30.31       $33.19

Variable cost per unit       $12.15      $13.45      $14.02       $14.55

Fixed operating costs   $41,000    $41,670    $41,890    $40,100

                                          Year 1        Year 2      Year 3        Year 4

Sales Revenue              $125,244   $123,000  $130,333   $146,036

Variable costs                  $51,030     $55,145   $60,286    $64,020

Fixed operating costs     $41,000     $41,670     $41,890     $40,100

Total costs                      $92,030     $96,815   $102,176    $104,120

Income before tax          $23,214      $26,185    $28,157      $41,916

Income tax (25%)               5,804          6,546       7,039        10,479

Net income/cash inflow  $17,410      $19,639     $21,118      $31,437

PV factor                           0.901          0.812          0.731        0.659

Present value                $15,686      $15,947    $15,437      $20,717

Total present value of the cash inflows = $67,787

Less investment cost of equipment =         10,000

Project's net present value (NPV) =          $57,787

3 0
3 years ago
An apparel manufacturing plant has estimated the variable cost to be $21 per unit. Fixed costs are $1M per year. Forty percent o
s344n2d4d5 [400]
Find the charge of A AND B to go to C and then you have to scream rlly loud okay! and then you have to jump up and down for 3x • 4x = 9p squared okay
3 0
3 years ago
The amount by which government expenditures exceed revenues during a particular year is the:A. public debt.B. budget deficit.C.
slava [35]

Answer:

The correct answer is

B. budget deficit

good luck

4 0
3 years ago
Other questions:
  • DOUBLE POINTS!! Explain the role played by consumers, business, and the government in a market economy. Hint: focus on the facto
    12·1 answer
  • Enterprise application vendors have created ________ to make their own customer relationship management, supply chain management
    7·1 answer
  • Katherine 35 is married with two children and files as Head of Household. She lived apart from her husband for the last eight mo
    10·1 answer
  • The following data have been recorded for recently completed Job 450 on its job cost sheet. Direct materials cost was $2,057. A
    9·1 answer
  • In the month of March, Baldwin corporation received orders of 169 units at a price of $15 for the product boat. Baldwin uses the
    11·1 answer
  • Spring is here, and Brian and his grandfather would like to go fishing for the weekend in Vermont. Brian could either go to the
    7·1 answer
  • Medium:
    5·1 answer
  • If GDP is $15 trillion, how many years will it take for GDP to increase to $30 trillion if annual growth is 2 percent
    7·1 answer
  • For the year, movers united has net income of $31,800, net new equity of $7,500, and an addition to retained earnings of $24,200
    13·1 answer
  • Write a proposal on why your business should implement a recycling program. (will give brainliest)
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!