Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of $ 1 comma 000, and a coupon rate of 7.7 % (annual payments). The yield to maturity on this bond when it was issued was 6.3 %. What was the price of this bond when it was issued? When it was issued, the price of the bond was $ nothing. (Round to the nearest cent.)
Answers
Answer:
The price of the bond when it was issued was $1101.59
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.
Coupon Payment (C) = 1000 * 0.077 = $77
Total periods (n)= 10
r = 6.3%
The formula to calculate the price of the bonds today is attached.
Bond Price = 77 * [( 1 - (1+0.063)^-10) / 0.063] + 1000 / (1+0.063)^10
Bond Price = $1101.592357 rounded off to $1101.59
The price of the bond when it was issued was $1101.59
Related Questions
Confectioners, a chain of candy stores, purchases its candy in bulk from its suppliers. For a recent shipment, the company paid $2700 and received 7500 pieces of candy that are allocated among three groups. Group 1 consists of 2230 pieces that are expected to sell for $0.15 each. Group 2 consists of 4960 pieces that are expected to sell for $0.31 each. Group 3 consists of 310 pieces that are expected to sell for $0.67 each. Using the relative sales value method, what is the cost per item in Group 1
Answers
Answer:
group units selling price total
1 2,230 $0.15 $334.50
2 4,960 $0.31 $1,537.60
3 310 $0.67 $207.70
total $2,079.80
Something is not right with the question, since the company paid too much money for the candy that they purchased. In order to allocate costs, we divide the cost by the selling price = $2,700 / $2,079.80 = $1.2982
the unit cost for each candy is:
Group sales price per unit adjusting cost factor cost per unit
1 $0.15 $1.2982 $0.195
2 $0.31 $1.2982 $0.402
3 $0.67 $1.2982 $0.87
Daves Inc. recently hired you as a consultant to estimate the company’s Weighted Average Cost of Capital. You have obtained the following information: 1. There is no preferred equity in the company’s capital structure. 2. The company’s debt is financed through issuing corporate bond and now the yield to maturity of this bond is 8%. 3. The company’s common stock has an estimated return of 10%. 4. The tax rate is 40%. 5. The bond price is $900 per unit and there are 1 million units of bond issued. 6. The common stock is priced at $10 per share and there are 10 million stock shares outstanding. What is the firm’s WACC based on market value?
Answers
Answer:
WACC = 5.32%
Explanation:
bond's YTM = 8%
cost of equity = 10%
tax rate = 40%
total bonds = $900,000,000
total common stocks = $100,000,000
total firm's value = $1,000,000,000
to simplify the process I will use hundreds of millions
WACC = (1/10 x 10%) + [9/10 x 8% x (1 - 40%)] = 1% + 4.32% = 5.32%
Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land 10 years ago for $5 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent these facilities from a competitor instead. If the land were sold today, the company would net $9.6 million. The company wants to build its new manufacturing plant on this land; the plant will cost $15.2 million to build, and the site requires $960,000 worth of grading before it is suitable for construction.
What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project?
Cash Flow amount $ _____
Answers
Answer:
$25,760,000
Explanation:
The net amount of decrease and increase of cash a business or individual owns.
To find the proper cash flow amount used as the initial investment in fixed assets, use the following:
Calculation of initial investment outflow = cost of land + cost of plant + grading cost
= $9,600,000 + 15,200,000, + $960,000
= $25,760,000
Calculation of initial investment outflow = $25,760,000
Therefore the initial investment outflow is $25,760,000
The deadweight loss of the profit-maximizing monopoly is identified by what area?
Answers
Answer:
area BCA
Explanation:
The deadweight loss of the profit-maximizing monopoly is recognize by area BCA.
Under the deadweight loss of monopoly More is produced under ideal or perfect competition than under monopoly, and deadweight loss is refer to as the amount that buyers value the added or additional output over and above the opportunity costs of producing the additional output.
When a monopoly maximizes profit, the deadweight loss will be larger if demand is in elastic because there will be a reasonable margin of price to marginal cost.
HK Goods Inc. is a large conglomerate that operates only in its home country. The company competes in industries like the consumer electronics, health care, hotel, airlines, education, and steel industries. Which of the following diversification strategies does this best illustrate?
A. Process diversification
B. Product diversification
C. Geographic diversification
D. Market diversification
Answers
Answer:
B. Product diversification
Explanation:
Based on this information it seems that HK Goods Inc. is following the diversification strategy known as product diversification. This strategy revolves around selling the same or different variations of a product but in various different markets. Which is what HK Goods Inc. is doing by competing in a large variety of markets such as consumer electronics, health care, hotel, airlines, education, and steel industries, but still selling the same base product in only one geographical location.
A fixed-income portfolio manager sets a minimum acceptable rate of return on the bond portfolio at 4.0% per year over the next 3 years. The portfolio is currently worth $10 million. One year later interest rates are at 5.0%. What is the portfolio value trigger point at this time that would require the manager to immunize the portfolio
Answers
Answer:
The portfolio value trigger point at this time that would require the manager to immunize the portfolio would be $12,401,625
Explanation:
In order to calculate the portfolio value trigger point we would have to calculate first the Minimum terminal value as follows:
Minimum terminal value=portfolio value*(1+rate of return)∧3
portfolio value= $10 million
rate of return=4.0%
Hence, Minimum terminal value=$10,000,000*(1.04)∧3
Minimum terminal value=$11,248,640
To calculate the portfolio value trigger point we would have to make the following calculation:
portfolio value trigger point=Minimum terminal value*(1+interest rates)∧2
portfolio value trigger point=$11,248,640*(1.05)∧2
portfolio value trigger point=$12,401,625
The portfolio value trigger point at this time that would require the manager to immunize the portfolio would be $12,401,625
Hillary Pillary, age 22, is a full-time student at Diploma Mills College and is awarded a master s degree at the end of the current year. Her tuition, fees, books, and supplies are $10,000 for the year. During the year, she received the following payments:
Scholarship for the year $7,000
Loan from college financial aid office $3,000
Cash prize awarded in beauty contest $2,000
Gift from Aunt Sue $1,000
What amount of these payments is taxable to Hillary for the current year?
A. $1,000
B. $2,000
C. $3,000
D. $5,000
E. $13,000
Answers
Which of the following expands a company's market, allows firms to grow, and makes them less dependent on their country's economy for success?
a. WTO
b. GATT
c. global marketing
d. legal environment
Answers
Answer:
global marketing
Explanation:
Global marketing is defined is marketing a country or company's product not only locally but also internationally.
it is the process of producing, placing, and marketing a business' or nations goods or services worldwide.
A lumber mill is capable of producing 10,000 board feet of lumber per day when run ten hours per day with minimal breaks. Over the past year, forestry legislation has reduced the availability of raw materials, so the mill has produced an average of 4,575 board feet per day. What is the utilization of the plant
Answers
Answer:
45.75%
Explanation:
When asking for the utilization of the plant, the question is basically referring to how much of its full potential is the plant currently operating at. Therefore this can be calculated by dividing its current output (4,575) by its maximum output (10,000) like so...
4,575 / 10,000 = 0.4575
Now we multiply that by 100 in order to get the percentage.
0.4575 * 100 = 45.75%
Therefore the current utilization of the plant is 45.75%
On January 2, 20X5, Park Co. purchased 10 percent of Sky, Inc.'s outstanding common shares for $400,000. Park is the largest single shareholder in Sky, and Park's officers are a majority on Sky's board of directors. As a result, Park is able to exercise significant influence over Sky. Sky reported net income of $500,000 for 20X5, and paid dividends of $150,000. In its December 31, 20X5, balance sheet, what amount should Park report as investment in Sky?
Answers
Answer:
The answer is $435,000
Explanation:
Initial Investment-----------------$400,000
Park Co's share of Sky's net income(10% x $500,000) --- $50,000
Park Co's share of Sky's dividend (10% x $150,000) ---------------------- ($15,000)
Reported Investment--------- $435,000
Therefore, Park's balance sheet
will report $435,000 as the investment in Sky's in the year ended December 31, 20X5.
In 1985, a given Japanese imported automobile sold for 1,476,000 yen, or $8,200. If the car still sold for the same amount of yen today but the current exchange rate is 144 yen per dollar, what would the car be selling for today in U.S. dollars?
Answers
Answer:
The car will be selling for $10250 today
Explanation:
To calculate the selling price of the car in dollars today, we have to convert the value of 1476000 yen into dollars based on the exchange rate between dollars and yen today. It is known that the car will be sold for the same amount of yen today for which it was sold in 1985 and this amount is 1476000 yen.
We know that 1 dollar equals 144 yen.
Thus, let x be the number of dollars that equal 1476000 yen today.
x = 1476000 / 144
x = $10250
The car will be sold for $10250 today
On September 12, Vander Company sold merchandise in the amount of $6,200 to Jepson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,200. Jepson uses the periodic inventory system and the gross method of accounting for purchases. Jepson pays the invoice on September 18, and takes the appropriate discount. The journal entry that Jepson makes on September 18 is:
Answers
Answer:
Accounts Payable $ 6200 Dr
Purchases Discounts $ 124 Cr
Cash $ 6076 Cr
Explanation:
Periodic inventory system is one in which the entries are passed periodically after a specific length of time.
In the Books of Jepson
Periodic Inventory
Gross Method
Journal Entry
Particulars Debit Credit
Accounts Payable $ 6200 Dr
Purchases Discounts $ 124 Cr
Cash $ 6076 Cr
Discount within the first ten days will be of 2%
$ 6200 *2%= $124
Remaining amount 6200-124 = 6076 will be paid in cash.
n applying the lower of cost or market rule, the inventory of rehab equipment would be valued at: A) $315. B) $247. C) $150. D) $235.
Answers
Answer:
D) $235.
Explanation:
As we know that the inventory should be valued at cost or market value whichever is lower
In the given case
Selling price = $340
Net realizable value is
= Selling price - cost of sell
= $340 - $25
= $315
Replacement cost is $235
Cost = $250
As we can see that the replacement cost is less than the cost so the replacement cost should be valued i.e $235
IBM expects to pay a dividend of $2 next year and expects future dividends and earnings to grow at 9% a year in perpetuity. The price of IBM is $100 per share. What is IBM's cost of equity capital
Answers
Answer:
Cost of equity = 11%
Explanation:
Cost of equity can be ascertained using the dividend valuation model. The model states that the price of a stock is the present value of future dividends discounted at the required rate of return.
Cost of equity (Ke) =( Do( 1+g)/P ) + g
g- growth rate in dividend, P- price of the stock
g - 9%, P - 100, D(1+g)= 2
D(1+g) represents the dividend payable in year 1 and is already given as 2
Cost of equity = (2/100 + 0.09)× 100
Cost of equity = 11%
Handel Company uses the allowance method for estimating uncollectible accounts.
January 5 Sold merchandise to Terry Richman for $2,000, terms n/15.
April 15 Received $600 from Terry Richman on account.
August 21 Wrote off as uncollectible the balance of the Terry Richman account when she declared bankruptcy.
October 5 Unexpectedly received a check for $300 from Terry Richman. It is not felt any more will be received from Richman.
Prepare journal entries to record the above transactions: (Credit account titles are automatically indente
Answers
Answer:
Entries are given below
Explanation:
January 5 - Sold Merchandise
DEBIT CREDIT
Receivable - Terry $2,000
Sales Revenue $2,000
April 15 - Received $600 from terry
DEBIT CREDIT
Cash $600
Receivable - Terry $600
August 21 wrote off uncollectable debt
DEBIT CREDIT
Allowance for debt (2000-400) $1,400
Receivable - Terry $1,400
October 5 Received a check
DEBIT CREDIT
Receivable - Terry $300
Allowance for doubtful debt $300
Consumerism is described as activities undertaken by independent individuals, groups, and organizations to protect their rights as consumers.
a. True
b. False
Answers
Answer:
a. True
Explanation:
This alternative is true, as consumerism can be defined as a phenomenon that is positive for economic growth to occur, because through the increase in the consumption of goods and services, companies benefit from increased sales, revenues and profits while consumers benefit from the utilities and benefits of the consumer goods they purchase.
Therefore, consumerism is seen as a phenomenon that strengthens the capitalist economy, as consumer spending accounts for most of the GDP and aggregate demand, factors essential to economic growth.
The cost of raising capital through retained earnings is__________ the cost of raising capital through issuing new common stock.
Answers
Answer:
less
Explanation:
flotation costs are the cost incurred when issuing new common stock.
there are no flotation cost when using retained earnings to raise new capital.
A change from carrying securities at fair value to the equity method of accounting for an investment in common stock resulting from an increase in the number of shares held by the investor requires:
A. only a footnote disclosure
B. that the cumulative amount of the change be shown as a line item on the income statement, net of tax.
C. retroactive restatement as if the investor always had used the equity method.
D. that the investor begins accruing income earned by the investee under the equity method at the date of acquisition of the new shares.
Answers
Answer:
D
Explanation:
the investor has to being with accruing income earned by the investee
Dove Corporation, a calendar-year C corporation, had the following information for 2019:
Net income per books (after-tax) $386,250
Taxable income 120,000
Federal income tax per books 25,200
Cash dividend distributions 150,000
Un-appropriated retained earnings, as of January 1, 2019 796,010
Based on the above, Dove's unappropriated retained earnings balance as of December 31, 2016, is:______.
Answers
Answer:
$1,032,260
Explanation:
Dove's unappropriated retained earnings balance as of December 31, 2016 = Unappropriated retained earnings balance on January 1, 2016 + Net income - Dividends distributions.
= 796,010 + 386,250 - 150,000.
= $1,032,260
Unappropriated retained earnings balance of Dove corporation as on December 31, 2016 is $1,032,260
Hildreth Company uses a job order cost system. The following data summarize the operations related to production for April, the first month of operations.
a. Materials purchased on account, $147,000.
b. Materials requisitioned and factory labor used:
Job No. Materials Factory Labor
101 $19,320 $19,500
102 23,100 28,140
103 13,440 14,000
104 38,200 36,500
105 18,050 15,540
106 18,000 18,700
For general factory use 9,000 20,160
c. Factory overhead costs incurred on account, $6,000.
d. Depreciation of machinery and equipment, $4,100.
e. The factory overhead rate is $40 per machine hour.
Job No. Machine Hours
101 23
102 43
103 37
104 65
105 32
106 35
Total 235
f. Jobs completed: 101, 102, 103, and 105.
g. Jobs were shipped and customers were billed as follows: Job 101, $7,640; Job 102, $10,810; Job 105, $16,490.
Required:
1. Journalize the entries to record the summarized operations.
2. Post the appropriate entries to T-accounts for Work in Process and Finished Goods.
3. Prepare a schedule of unfinished jobs to support the balance in the Work in Process account.
4. Prepare a schedule of finished jobs to support the balance in the Finished Goods account.
Answers
Answer:
raw materials 147,000 debit
account payable 147,000 credit
WIP-inventory 130,110 debit
Factory Overhead 9,000 debit
raw materials 139,110 credit
WIP-inventory 132,380 debit
Factory Overhead 20,160 debit
Wages Payable 152,540 credit
Factory overhead 6,000 debit
Account Payable 6,000 credit
Factory Overhead 4,100 debit
Acc Dep machinery 4,100 credit
WIP-inventory 9,400 debit
Factory Overehad 9,400 credit
Finished Goods 233,790 debit
WIP-Inventory 233,790 credit
Cost of Good Sold 127,570 debit
Finished Good Invnetory 127,570 credit
account receivables 34,940 debit
sales revenue 34,940 credit
Cost of GoodSold 29,860 debit
Factory Overhead 29,860 credit
Explanation:
Materials Labor Overhead Total
101 19320 19500 920 39740
102 23100 28140 1720 52960
103 13440 14000 1480 28920
104 38200 36500 2600 77300
105 18050 15540 1280 34870
106 18000 18700 1400 38100
Total 130110 132380 9400 271890
Completed 101 + 102 + 103 + 105
Total finished good: 233,790
Applied overhead calculations:
235 hours x $40 = 9,400
COst of Good Sold
101 + 102 + 105
Total cost: 127,570
Sales Revenues
7,640 + 10,810 + 16,490 = 34,940
Overhead T account
DEBIT CREDIT
9,000
20,160
6,000
4,100
9,400
29860 UNDERAPPLIED
we must increase it against Cost of Good Sold
You put up $50 at the beginning of the year for an investment. The value of the investment grows 4% and you earn a dividend of $3.50. Your HPR was ____. A. 4% B. 3.5% C. 7% D. 11%
Answers
Answer: 11%
Explanation:
From the question, we are informed that an individual put up $50 at the beginning of the year for an investment and that the value of the investment grows 4% and the person earn a dividend of $3.50.
The HPR will be calculated as :
= 4% + (3.50/50)
= 4% + 0.07
= 0.04 + 0.07
= 0.11
= 11%
You left work on Thursday evening and forgot to turn in a report that was due that day to your manager. You decide you need to compose an apology letter. What should you do when composing the message
Answers
Answer:
Explanation:
In this specific scenario, the message that you are composing to your manager should be sincere, professional, and have a valid reason for why the report was not turned in. Aside from the note, it should also have the finished report attached to it, otherwise the manager will think that the note is an empty excuse which will be meaningless if the report is still overdue.
The entrepreneur's integrity is not relevant to bankers when determining the creditworthiness of a business loan.
A. True
B. False
Answers
Answer:
A.True
Explanation:
a person who sets up a business or businesses, taking on financial risks in the hope of profit.
In calculating the creditworthiness of an entrepreneur, integrity is true.
Why is an entrepreneur's integrity not important?Financial establishments try to mitigate the hazard of lending to debtors via means of performing a credit score evaluation on people and companies using a brand new credit score account or loan.
They are called the 5 Cs of credit score because they consist of capacity, capital, conditions, character, and collateral.
So, from the above declaration, it's clear that the option B is true.
Learn more about Entrepreneur, refer to:
https://brainly.com/question/19027395
If workers leave a country to seek out better opportunities in another country, then this will move the original economy up along a stationary short-run aggregate supply curve. move the original economy down along a stationary short-run aggregate supply curve. shift the short-run aggregate supply curve of the original country to the left. shift the short-run aggregate supply curve of the original country to the right.
Answers
Answer: Shift the short-run aggregate supply curve of the original country to the left.
Explanation:
Workers are an input in the production of goods and services. If workers in an economy reduce in number, this would mean that there would be less workers able to produce goods and services in the country. This will invariably lead to a decrease in the amount of goods and services supplied and when there is a decrease in supply, the Short-Run Aggregate Supply curve will shift to the left to reflect this.
Between any two countries trading two products, where each country has a comparative advantage in producing one of these two products, we know that the regulated trade is always better than the free trade.
a. True
b. False
Answers
Answer:
False.
Explanation:
In Economics, comparative advantage is referred to as the advantage of a country enjoyed by producing one of the two goods. In this case, the other country also entertains the comparative advantage by producing other products. However, it cannot be said that regulated trade is better than free-trade.
XYZ's stock price and dividend history are as follows: Year Beginning-of-Year Price Dividend Paid at Year-End 2017 $ 170 $ 3 2018 200 3 2019 150 3 2020 170 3 An investor buys three shares of XYZ at the beginning of 2017, buys another two shares at the beginning of 2018, sells one share at the beginning of 2019, and sells all four remaining shares at the beginning of 2020. a. What are the arithmetic and geometric average time-weighted rates of return for the investor
Answers
Answer:
The arithmetic average time-weighted rates of return for the investor is 4.19%
The geometric average time-weighted rates of return for the investor is 2.124%
Explanation:
The arithmetic average return is simple average returns of stocks, calculated as: Arithmetic average return = Sum of returns/ number of years
While geometric average return is calculated as: Geometric average return = number of years√ {(1+r1)*(1+r2)*(1+r3)…} -1
Where r1, r2, r3…are the returns for year 1, 2, 3….
Yearly Return = {(capital gains + dividend)/price}*100
Return from 2017-2018= {(200 - 170) + 3} /170 *100 = 19.41%
Return from 2018-2019 = {(150 - 200) + 3} /200*100 = -23.5%
Return from 2019-2020 = {(170 - 150) + 5} /150 *100 = 16.67%
Hence, Arithmetic mean = (19.41% -23.5% +16.67%)/3 = 12.58%/3 = 4.19%
While Geometric mean = [(1+19.41%)*(1-23.5%) *(1+16.67%)] ^ (1/3) -1
= (1.1941 *0.7650 * 1.1667) ^1/3 – 1 = 0.02124 = 2.124%
The arithmetic average time-weighted rates of return for the investor is 4.19%
The geometric average time-weighted rates of return for the investor is 2.124%
"When a business establishes a web-site and begins to allow customers to" place orders online without ever coming into their store, they are responding to changes in the:_______
a. social environment
b. economic environment
c. global environment
d. technological environment
Answers
Answer: technological environment
Explanation:
Technological environment simply has to do with how science and technology and technological progress has impacted on businesses.
The technological environment is the environment whereby the technological changes affect the marketing efforts of firms. Therefore, a business that establishes a web-site and begins to allow customers to place its orders online without ever coming into their store, is responding to changes in the technological environment.
A company that wanted to increase its capital through equity financing would most likely get involved in which of the following markets?
A. Stock market
B. Bond market
C. Commodity market
D. Currency exchange market
Answers
A company that wanted to increase its capital through equity financing would most likely get involved in the stock market.
What is the stock market?This is the market where shares, treasuries and other forms of security are traded.
The market is a place for a company to invest in if they are trying to increase their equity financing.
Read more on the stock market here: https://brainly.com/question/11967736
"Bic, which is widely known for producing ballpoint pens and related writing products, tried to introduce Bic disposable underwear. The reason this new product failed is likely because of"
Answers
Answer: a. ineffective branding.
Explanation:
People were already used to seeing Bic as a pen brand to the extent that in some countries Bic is a generic name for all pens . When they introduced the underwear, people could probably see no need to buying an underwear with the Bic brand because they knew it as a pen brand. They therefore could not generate a strong brand association with the new product.
It is the same logic as when an actor has been on a Sitcom for so long that when they take on other roles, the public judges them a bit too harshly for it because they are not used to them in other roles.
Identify and describe two financial management practices that firms use to manage each of the following: (a) liquidity risk; (b) interest rate risk; and (c) credit risk.
Answers
Answer:
a. Liquidity Risk
- Reduce Cash Conversion Cycle
Management tries to reduce the Cash Conversion cycle which is the time taken for proceeds to be received from inventory. By reducing this period, the company can have more cash.
- Maintain Cash Reserve
Maintaining a cash reserve that the business can fall back for contingency helps the company maintain liquidity. This amount should not be too small that it cannot help neither should it be too big that it hinder investment opportunities.
b. Interest Rate Risk
- Derivatives
Buying a a Derivative aimed at reducing interest rate risk can reduce it. Derivatives such as Interest Rate Futures will allow the company is make sure that they get a particular rate in future.
- Use more complex and accurate models to predict Interest rates and take measures against the fluctuations.
c. Credit Risk
- Use of Bond Ratings
Ratings will tell how risky the bond that is to be acquired is. If the Rating is quite low then the Credit Risk is high.
- Credit Default Swaps
This is a method of reducing Credit risk by insuring the Security in question against losses. This is usually done by the Issuer as an added requirement of the transaction.