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mylen [45]
3 years ago
10

Suppose we have a bond issue currently outstanding that has 20 years left to maturity. The coupon rate is 8%, and coupons are pa

id semiannually. The bond is currently selling for $828 per $1,000 bond. What is the cost of debt?
a. 8%
b. 9%
c. 10%
d. 11%
e. 1296
Business
1 answer:
ser-zykov [4K]3 years ago
7 0

Answer:

The answer is C.

Explanation:

The coupon payment is annual, meaning it is being paid once a year.

N(Number of years/Number of periods) = 40(20 x 2)

I/Y(Yield-To-Maturity) = ?

PMT(coupon payment) = $40[(80÷2/100) x $1,000]

FV(Future value/Par value) =$1,000

PV(present value or market value) = -828

Now to solve this, lets use a financial calculator (e.g Texas BA II plus)

N= 40; I/Y = ?; PMT = $40; FV = $1,000; CPT PV = -828

The cost of debt is 5%

Note that this is for semiannual. The annual cost of debt is therefore, 10%(5% x 2)

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Answer:

a

Explanation:

greater output and charge lower price than the monopolist

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3 years ago
Active endeavors specializes in sporting equipment. recently, it has decided to add to its business units by opening a steakhous
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3 years ago
An aircraft factory manufactures airplane engines. The unit cost (the cost in dollars to make each airplane engine) depends on t
nataly862011 [7]

Answer:

Incomplete question

Complete question:

An aircraft factory manufactures airplane engines. The unite cost C ( the cost in dollars to make each airplane engine) depends on the number of engines made. If x is the number of engines made, then the unit cost is given by the function C(x)=0.8x^2-160x+26848. What is the minimum unit cost? not rounded

Answer: $18848

Explanation:

Since we have the function

C(x) = 0.8x²-160x+26,848

Firstly, we differentiate

C'(x) = 1.6x - 160

The minimum cost will occur where x = 100.

The vertex of a parabola (quadratic equation) occurs where X = -b/2a, in this case we have that

X = 160/(2×0.8) = 100

Therefore, we substitute x = 100 into the original equation

We have that

C(x) = 0.8(100)²-160(100)+26848

C(x) = 8000-16000+26848

C(x) = $18848

8 0
3 years ago
"suppose that an angry customer started yelling at you in front of other customers. what would you do?" this type of interview q
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A future-focused question
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3 years ago
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Haulsee Inc. builds 800,000 golf carts a year and purchases the electronic motors for these carts for $370 each. Ordering costs
Allisa [31]

Answer:

4,084

Explanation:

Calculation to determine the economic order quantity (EOQ) for Haulsee

Using this formula

Economic Order Quantity (EOQ) =((2* Annual Requirement * Cost per order)/Carrying cost per unit)^ (1/2)

Let plug in the formula

Economic Order Quantity (EOQ) = ((2*800,000*540)/(370*14%))^(1/2)

Economic Order Quantity (EOQ) = 4,084 units

Therefore the economic order quantity (EOQ) for Haulsee is 4,084 units

4 0
3 years ago
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