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S_A_V [24]
2 years ago
15

Cold Boxes Ltd. has 100 bonds outstanding (maturity value = $1,000). The nominal required rate of return on these bonds is curre

ntly 10 percent (Kd), and interest is paid semiannually. The bonds mature in 5 years, and their current market value is $768 per bond.
What is the annual coupon interest rate?

a.8%

b.6%

c.4%

d.2%

e.0%
Business
1 answer:
pentagon [3]2 years ago
8 0

Answer:

correct option is c.4%

Explanation:

given data

maturity value = $1,000

nominal rate of return r = 10 percent  = 5 % semi annually = 0.05

mature time t = 5 years  = 10  semi annually

current market value = $768

solution

we apply here present value formula that is

present value = coupon rate × maturity value × \frac{1-(1+r)^{-t}}{r} + \frac{mature\ value}{(1+r)^{-n}}   ..............1

put here value and we get

$768 =  coupon rate × $1000 ×  \frac{1-(1+0.05)^{-10}}{0.05} ×  \frac{1000}{(1+0.05)^{-10}}

solve it we get

coupon rate  = 1.99549 %  Semi-annual

so here annual coupon interest rate is = 2 × 1.99549 %

annual coupon interest rate is 3.99 = 4%

so correct option is c.4%

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Barnes' Brothers has the following data for the year ending 12/31/2015: Net income = $600; Net operating profit after taxes (NOP
qwelly [4]

Answer: $490

Explanation:

Economic value added is the estimate of the economic profit of a firm. The economic value added(EVA) is also gotten when the capital charge for the raise of the firm's capital is deducted from the net profit.

Based on the above information, the economic value added will be:

= Net profit - (Total Operating capital × Weighted average cost of capital)

= $700 - ($2,100×10%)

= $700 - $210

= $490

3 0
2 years ago
You just stuffed yourself with a hot dog, a large tub of popcorn, and a box of milk duds while watching a movie. when you come o
marishachu [46]

Answer:

Incentive Theory

Explanation:

Reason behind would be because how many things you ate your brain and taste are processing that all at the same time making it taste like a completely different substance.

7 0
2 years ago
Ajax, Inc., issued callable bonds with a par value of $1,000,000 that require the payment of a call premium of $10,000. The bond
eduard

Answer and Explanation:

The journal entry is shown below;

Bond payable $1,000,000

Loss on retirement of bond $20,000

           To Discount on bond $10,000

           To Cash $1,010,000

(Being the loss on retirement of bond is recorded)

For recording this we debited the bond payable and loss as it decrease the current liabilities and it increased the losses at the same time it decreased the discount and decreased the cash so the respective accounts are credited

7 0
2 years ago
The development cost of a project X is $150,000. The operating costs for year 1, 2 and 3 respectively are $5000, $6000, and $ 70
Sati [7]

Answer:

NPV= $31,808.91

Explanation:

Giving the following information:

Io= -$150,000.

The operating costs:

Year 1= $5,000

Year 2= $6,000

Year 3= $7,000

The benefits:

Year 1= $80,000

Year 2= $90,000

Year 3= $70,000

To calculate the Net Present Value (NPV) we need to use the following formula:

NPV= -Io + ∑[Cf/(1+i)^n]

Cf= cash flow

Io= -150,000

Cf1= 80,000 - 5,000= 75,000/1.04= $72,115.39

Cf2= 90,000 - 6,000= 84,000/1.04^2=$77,662.72

Cf3= 70,000 - 7,000= 63,000/1.04^3= $56,006.77

NPV= $31,808.91

5 0
2 years ago
If employees of Washburn guitars want to travel to Asia to meet with guitar craftspeople, what is the best choice of who to send
jasenka [17]

Answer:

The answer is "The group of a range of age, color, sexual orientation, financial backgrounds, employment and age differences".

Explanation:

In the given-question, the above answer is correct because the team represents a wide community of gender, ethnicity, gender identity, income levels, academic attainment, and also includes the disparities across generations, although diversity spans race and gender, and presentation must be granted to all types of people, that's why the diversity is a big factor in the visit.

3 0
2 years ago
Read 2 more answers
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