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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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Roger purchased a stock for $16 a share. The stock paid a $1 annual dividend and increased in price by $2 a year for the followi
Gemiola [76]

Answer:

The answer is 11.2%

Explanation:

Cost of acquisition: $16 per share

Annual dividend: $1

The stock increases by $2 every year for 3 years. Therefore, we have:

First year is $16 per share

Second year is $18 per share

Third year is $20 per share.

The arithmetic average annual capital gain will be

($2/$16 + $2/$18 + $2/$20)/3

(0.125 + 0.111 + 0.1) / 3

0.336/3

0.112

Expressed as a percentage:

= 11.2%

8 0
3 years ago
An account credits interest at an effective rate of 4% for years 1-3, 5% for years 4-6, and 6% for years 7-9. Deposits of $1,000
netineya [11]

Answer:

The accumulated value of the deposits at the end of 9 years is <u>$11,242.18</u>

Explanation:

Note: Find attached the excel file for the calculation.

Since the deposits are made into the account at the end of each year, interest will be earned on the opening balance for each year since it remains the account for 12 months.

No interest will be earned on the deposit of $1,000 made at the end of each year.

The opening balance, interest earned and the deposit for each year are then added together to obtain the closing balance for each year.

Since the closing balance for year 9 is <u>$11,242.18</u>, this is therefore the accumulated value of the deposits at the end of 9 years.

Download xlsx
3 0
3 years ago
When you first start out you should expect to make less money than you will later because?
Nady [450]
Well due to lack of effective advertising and no expertise or experience in the field you shouldn’t expect major profit.However when you get more experienced and build a name for your company you will make more profits.
You can get more share capital ect
6 0
3 years ago
Continuing the analysis of Ginnie's Gym Refreshment Bar:
Irina18 [472]

The bundle that is going to maximize profit is going to be Late

<h3>How to find the bundle that would maximize profit</h3>

we have the net profit from early to be 7 + 5 = 12

We have the net profit from late to 6 + 10 = 16

We can see that the value for late is greater at 16 compared to that of the early.

Hence we can say that late has the greatest profit.

Next we have to solve for the profit that is made. This is the net profit.

The solution is given as 16 - 12 = 4

<h3>What is profit maximization</h3>

This is the process where by businesses would try to get the best output possible from the given inputs that they would use in the business. It goal is to be able to maximize the returns that they would make.

Read more on profit maximization here:

brainly.com/question/13464288

#SPJ1

8 0
2 years ago
The inventory system employing accounting records that continuously disclose the amount of inventory is called a.retail b.period
omeli [17]

Answer:

The correct option is D

Explanation:

Perpetual inventory is a method of accounting for inventory that records the sale of inventory immediately by the use of computerised point of sale systems.

6 0
3 years ago
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