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AveGali [126]
1 year ago
10

An investor purchased a "par bond" for $500 with the principal $500. Over n = 6 years the bond will pay 2% coupon annually. Find

the IRR of the cash flow stream (also called Yield to Maturity). Note: The bond has the following cash flow stream: at time zero payment $500 is made; for 6 years, at the end of each year the coupon payment (2/100)*500 is made; also at the end of year 6 the principal $500 is paid in addition to the last coupon.
Business
1 answer:
liubo4ka [24]1 year ago
3 0

Answer:

2.0%

Explanation:

Coupon received annually = $500*2% = $10

We have the cash flow from year 0 to year 6 as below:

Year 0 ($500)

Year 1 $10  

Year 2 $10  

Year 3 $10  

Year 4 $10  

Year 5 $10  

Year 6 $510   (Principal $500 & coupon $10)

IRR (internal rate of return) whereas  the present value of all cash flow is nil

It is very difficult to calculate IRR manually, but easily in excel = IRR(-500,10,10,10,10,10,510) = 2%

Please see excel attached

Download xlsx
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Swinnerton Clothing Company's balance sheet showed total current assets of $2,250, all of which were required in operations. Its
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Answer: $1,530

Explanation:

It's net working capital that was financed by investors include the following figures,

Total current Assets.

Accounts Payables and Accrued wages need to be deducted because they came about as a result of operations and are neither of debt or equity financing so are considered free.

So, in calculating we have,

= 2,250 - 575 - 145

= $1,530

Swinnerton Clothing Company's net operating working capital that was financed by investors is $1,530

6 0
2 years ago
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In the long run a company that produces and sells laundry detergent incurs total costs of $2,500 when output is 1,250 units and
Schach [20]

Answer:

The correct answer is a) economies of scale

Explanation:

Economies of scale are when a company increases the production or associate with other company, to obtain a better price to reduce the cost of production. This happens because costs are spread over a larger number of goods.

Example:

Company A, require apples to produce his final product. And the provider has a price for each apple, however, if you buy more than 100, he gives you a discount of 5%. Company A can´t afraid this, because it just needs 50 apples per production.

The solution for the company is trying to expand the market, become efficient, to duplicate his production and obtain the discount. Or associate with Company B that needs 50 apples too, to obtain the discount and reduce his cost.  (1 big purchase is better than 2 small purchases)

8 0
1 year ago
Which best describes the barrier to trade known as dumping? Destroying shipments of imports to force consumers into purchasing d
Lana71 [14]

Answer: Selling exports abroad at a lower price than the domestic price.

Explanation:

Dumping is a practice in international trade where the country exporting, does so at a price that is lower than the domestic price of the good being exported in the importing country.

This allows the country exporting to gain more market share but can also lead to the collapse of the domestic industry thereby allowing for an export based monopoly to form.

An example would be Japan selling electronics in the U.S. at lower rates to capture market share even though those same electronics commanded a higher price in Japan.

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Central Valley Construction (CVC) purchased $80,000 of sheet metal fabricating equipment from Buffalo Supply on January 1, 20X1.
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Answer:

......................

Explanation:

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2 years ago
You have calculated the pro forma net income for a new project to be $46,050. The incremental taxes are $22,540 and incremental
Delicious77 [7]

Answer:

The multiple choices are:

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Option E is the correct option,$62,650

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The operating cash flow=net income+incremental depreciation

the operating cash flow=$46050+$16,600=$62650

The incremental taxes have already been factored into the computation of the net income, hence it is,it is expected that the depreciation would just be added to the net income in a bid to ascertain operating cash flow of the business

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