Answer:
bond market value $660
Explanation:
We need to calculate the present value of the maturity and the cuopon payment using the effective rate of 9.7%
First we do the annuity:
C 24.25 (1,000 face value x 4.85 bond rate / 2 )
time 24.00 (12 year 2 payment a year)
rate 0.04850 (current rate divide by 2 to get it annually)
PV $339.55
Then present value of the maturity
Maturity 1,000.00 the face value of the bond
time 24.00
rate 0.04850
PV 320.89
Finally we add them together:
PV coupon payment $339.5545
PV maturity $320.8910
Total $660.4455
rounding to nearest dollar
bond market value $660
After a car is purchased at $43000 and looses 25% worth every year then the car will be worth $9200 or less after four(4) years.
What does Purchase mean?
Purchase is a term used to refer to the acquisition of goods or services in exchange for money. It is a common business transaction and can involve buying something outright or entering into an agreement to pay for it over time.
What does Services mean?
Services is a broad term that refers to any type of work or activity performed to meet the needs of a customer. Services can range from professional services like accounting or consulting to tangible products like food or clothing. Services are typically intangible in the sense that they cannot be touched, felt, or seen, but the benefits they provide are very real.
As per the price of the car which is $43,000 and it looses 25% each year which is $10750. From this we come to know that the car will be worth of $9200 or less within 4 years.
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Answer:
d. the camry becomes an inferior good because the good is now perceived as lower in quality than a lexus
Explanation:
There are a number goods that over time, for a variety of reasons, transition from being a normal good to an inferior good or from being an inferior good to a normal good. One such example of a good is the Toyota Camry. In the 1980s, more income for a household usually resulted in more Camrys being purchased. However, today more Toyota Camrys are purchased by households that have experienced a reduction in income.
How could this happen?
<u>This could only have happened because of a change in perception in households over time. </u>
It is stated in the Scenario that ''today more Toyota Camrys are purchased by households that have experienced a reduction in income.''
<u>That means Toyota Camry has become an inferior good that is purchased more when income falls.</u>
<u>Hence, the only reason the scenario would have occurred is that the camry becomes an inferior good because the good is now perceived as lower in quality</u> than a lexus
Answer:
9.73%
Explanation:
the market value of equity = 10,000,000 stocks x $15 = $150,000,000
the market value of debt = 40,000 bonds x $1,150 = $46,000,000
total = $196,000,000
weight of equity = 0.7653
weight of debt = 0.2347
Re = 3.5% + [1.35 x (0.115 - 0.055)] = 0.035 + 0.081 = 0.116
cost of debt = ytm = {36.25 + [(1,000 - 1,150)/40]} / [(1,000 + 1,150)/2] = (36.25 - 3.75) / 1,075 = 32.50 / 1,075 = 0.03023 x 2 = 0.0605
after tax cost of debt = 0.0605 x (1 - 40%) = 0.0363
WACC = (0.116 x 0.7653) + (0.0363 x 0.2347) = 0.09729 = 9.73%
Answer:
In perfect competition, the product offered is standardized whereas in monopolistic competition product differentiation is there. In monopolistic competition, every firm offers products at its own price. ... Entry and Exit are comparatively easy in perfect competition than in monopolistic competition.
Explanation:
(hope this helps)
