Akers Company sold bonds on July 1, 20X1, with a face value of $100,000. These bonds are due in 10 years. The stated annual inte
1 answer:
Answer:
Bond Price = $86409.67366 rounded off to $86409.67
Explanation:
To calculate the price of the bond today, we will use the formula for the price of the bond. 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) = 100000 * 0.06 * 6/12 = $3000
Total periods (n) = 10 * 2 = 20
r or YTM = 0.08 * 6/12 = 0.04 or 4%
The formula to calculate the price of the bonds today is attached.
Bond Price = 3000 * [( 1 - (1+0.04)^-20) / 0.04] + 100000 / (1+0.04)^20
Bond Price = $86409.67366 rounded off to $86409.67
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Answer:
The Break Even Point is the Sales Value that will cover the cost of production. Meaning the Sales Value that will bring profitability to Zero
Break Even sales for Company wide = $378,000
Break Even Value for Chicago is $111,429
And Break Even Value for Minneapolis is $120,000
The Addition of both Outlets/Offices Break Even Sales is less than the Company-wide because the Offices don't share in the Common Fixed Expense as these are specific to Group reporting.
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