Dexter Mills issued 20-year bonds one year ago at a coupon rate of 10.2 percent. The bonds make semiannual payments and have a p
ar value of $1,000. If the YTM is 8.2 percent, what is the current bond price?
1 answer:
Answer:
$1,190.93
Explanation:
In this question, we use the present value formula that is shown in the attachment. Kindly find it below:
Given that,
Future value = $1,000
Rate of interest = 8.2% ÷ 2 = 4.1%
NPER = (20 years - 1 years) × 2 = 38 years
PMT = $1,000 × 10.2% ÷ 2 = $51
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, after solving this, the current bond price is $1,190.93
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Answer:
5.657%
Explanation:
Data provided:
Face value = $1,000
Current market price = $640
Time of maturity, t = 8 year
Now,
the compounding formula is given as:
Face value = Current amount ×
where,
r is the rate i.e pretax rate of debt
n is the number of times the interest is compounded i.e for semiannual n = 2
thus, on substituting the values, we get
$ 1,000= $ 640 ×
or
1.5625 =
or
= 1.0282
or
r = 0.05657
or
pretax cost of debt = 0.05657 × 100% = 5.657%
Answer:
a) 275,000 boxed per year
b) sales price of $ 11.04
c) <em> sale volume in dollars 4.830.967,74</em>
Explanation:
selling price: $ 9.60
Variable cost: $<u> 5.76</u>
Contribution: $ 3.84
Contribution Ratio: 3.84 / 9.60 = 40%
1,056,000 / 3.84 = <em>275,000</em>
<em />
<em>If Variable cost increase by 15%</em>
<em>To keep contribution ratio at 40% then selling price should be:</em>
(<em>X - 5.76 x 1.15) / X = 0.40</em>
<em>X = $ 11.04</em>
To keep the same income but without changing price:
current income: (sales x contribution less fixed cost)
(390,000 x 3.84 - 1,056,000) = 441,600
contribution: <em>(9.60 - 5.76 x 1.15) / 9.60 = 0.31</em>
<em>(1,056,000 + 441,600)/ 0.31 = </em>
<em>1.497.600 / 0.31 =</em><em> 4.830.967,74</em>