Harpeth Valley Water District has a bond outstanding with a coupon rate of 3.63 percent and semiannual payments. The bond mature
s in 23 years, with a yield to maturity of 4.17 percent, and a par value of $5,000. What is the market price of the bond
1 answer:
Answer:
Market price of Bond = $4603.116669 rounded off to $4603.12
Explanation:
To calculate the price of the bond, we need to first calculate the coupon payment per period. We assume that the interest rate provided is stated in annual terms. As the bond is a semi annual bond, the coupon payment, number of periods and semi annual YTM will be,
Coupon Payment (C) = 5000 * 0.0363 * 1/2 = $90.75
Total periods (n)= 23 * 2 = 46
r = 4.17% * 1/2 = 2.085% or 0.02085
The formula to calculate the price of the bonds today is attached.
Bond Price = 90.75 * [( 1 - (1+0.02085)^-46) / 0.02085] + 5000 / (1+0.02085)^46
Bond Price = $4603.116669 rounded off to $4603.12
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Answer: $20,000
Explanation:
Given that,
Singer's original capital = $40,000
McMann's original capital = $60,000
Singer's salary = $12,000
McMann's salary = $18,000
Interest on original capital = 10%
Profit sharing ratio = 3:2
Income of the year = $30,000
McMann's share of the income:
Salary = $18,000
Interest = $6,000
Singer's share of the income:
Salary = $12,000
Interest = $4,000
Therefore,
Remainder = $30,000 - $40,000
= -$10,000
Hence, remainder will be divided among these two partners in 3:2 ratio.
So,
McMann's share of remainder =
= -$4,000
Therefore, McMann's share of the income:
= Salary + Interest + remainder
= $18,000 + $6,000 + (-$4,000)
= $20,000