Question #5

A five-year bond has a par value of 1000, a coupon of 3%, and a required yield of 5%. What should be the market price of this bo

Dmitrij [34]

Answer:

The market price of the bond is $913.41

Explanation:

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

N(Number of years/Number of periods) = 5

I/Y(Yield-To-Maturity) = 5 percent

PMT(coupon payment) = $30 [(3/100) x $1,000]

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

PV(present value or market value) = ?

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

N= 5; I/Y = 5%; PMT = $30; FV = $1,000; CPT PV = -$913.41

Therefore, the market price of the bond is $913.41

4 0

2 years ago

What hardware temporarily stores information when software is being used? system bus, ROM, HDMI, or RAM

timurjin [86]

RAM or Random Access Memory stores memory while you have software up, for example a video game stores your progress temporarily using RAM until it stores it in your computers hard drive.

6 0

3 years ago

Read 2 more answers

You want to buy a car, and a local bank will lend you $20,000. The loan will be fully amortized over 5 years (60 months), and th

EastWind [94]

Amortizing a loan P over n periods at i% interest / period, the payment per period is given by:
$A= P(i(1+i)^n)/((1+i)^n-1)$

In given situation,
P=20000
period=month
i=10%/12
n=5*12=60 months

A. monthly payment amount
$A= P(i(1+i)^n)/((1+i)^n-1)$
$= 20000(.1/12(1+.1/12)^60)/((1+.1/12)^60-1)$
$=424.98$ to the nearest cent

B. EAR (effective annual rate)
the APR is 10%, but compounded monthly.
So
EAR=(1+i/12)^12-1
=(1+0.1/12)^12-1
=0.104713
=10.4713% (effective annual rate)

7 0

3 years ago

Hodge Inc. has some material that originally cost $74,600. The material has a scrap value of $57,400 as is, but if reworked at a

Burka [1]

Answer: If the material is reworked and sold, Hodge Inc. has a financial disadvantage of (- 4500).

Let's see why:

1) If we sell the material at its disposal value: We have a cost of $ 74600 and the income from sale would be $ 57400 =

57400 - 74600 = (-17200). We have a loss of $17200.

2) If we rework the material we will have an original cost of $ 74600, an additional cost for reworking of $ 1500 and the income from its sale would be $ 54400 =

54400 - (74600 + 1500) = (-21700) We have a loss of $ 21700.

Then comparing the 2 situations =

(-21700) - (-17200) = -4500. There is a financial disadvantage of $4,500 if the material is reworked instead of selling it as scrap.

6 0

3 years ago

An increase in the selling price per unit will decrease an organization's operating leverage, assuming sales unit volume doesn't

xenn [34]

Answer:

a) true

Explanation:

This is true because, increasing the price of the product sold by an organisation directly lead to the reduction of the operating cost of the said organization, all other things being equal. <em>For example, a glass manufacturing company increasing the selling price per unit glass from $40 to $90 will definitely lead to operating cost reduction.</em>

7 0

3 years ago