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Gelneren [198K]
3 years ago
7

Potter Industries has a bond issue outstanding with an annual coupon of 6% and a 10-year maturity. The par value of the bond is

$1,000. If the going annual interest rate is 8%, what is the value of the bond?
Business
1 answer:
kirill115 [55]3 years ago
5 0

The value of the bond is $865.80.

<h3>What is a bond?</h3>

A bond is a debt instrument used to raise capital. Bondholders receive periodic interest payment. At the maturity of the bond, the bondholders receive the amount invested.

<h3>What is the value of the bond?</h3>

The value of the bond can be determined by calculating the present value of the bond. The present value is the sum of the discounted cash flows.

Present value = (60 / 1.08) +  (60 / 1.08^2) +  (60 / 1.08^3) +  (60 / 1.08^4) +  (60 / 1.08^5) +  (60 / 1.08^6) +  (60 / 1.08^7) +  (60 / 1.08^8) +  (60 / 1.08^9) +  (60 / 1.08^10) +  (1000 / 1.08^10) = $865.80

To learn more about present value, please check: brainly.com/question/25748668

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7 0
4 years ago
Common allocation bases are a.direct labor dollars, direct labor hours, and machine dollars b.machine dollars, direct labor doll
kkurt [141]

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The correct answer is letter "C": direct labor dollars, direct labor hours, and machine hours.

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The allocation base is the method of assigning overhead costs to the source that causes it. More often, the allocation base is used for goods being produced in the manufacturing industry. In case the allocation base has properly been applied, changes in the allocation costs will not have a major impact on the costs of the source.

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4 years ago
The CFO of Ward Enterprises is setting up a new activity-based costing system. He has currently finished identifying activities
horrorfan [7]

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a. Identify a cost driver associated with each activity.

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3 years ago
Suppose that a young couple has just had their first baby and they wish to ensure that enough money will be available to pay for
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The parents would deposit $ 3150 on the second birthday.

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The amount that parents would deposit on the second birthday-

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The amount that would be deposited on 2nd birthday would be 3000+150= $ 3150

3 0
3 years ago
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