BUSINESS COLLEGE

The bonds of Lapeer Airlines, Inc., are currently trading on the market at $1,119.34. They have a par value of $1000, make semi-annual coupon payments with a coupon rate of 6.4%, and a YTM of 4.6%. How many years until these bonds mature?

Answers

Answer 1
Answer:

Answer:

Number of years = 7.54 or 8 years

Explanation:

We know,

YTM = (I + (M - V_(o))/(n) )/((2M + V_(o) )/(3))

Here,

I = Coupon payment

M = Par value

V = Market price

Given,

M = Par value = $1,000

V = Market price = $1,119.34

I = Coupon Payment = Par value × Coupon rate = $1,000 × 6.4% = $64

Since, it is a semi-annual payment = $64/2 = $32

YTM = 4.6%

Therefore, putting the value into the above formula, we can get

YTM = (32 + (1,000 - 1119.34)/(n) )/(((2*1,000) + 1,119.34)/(3))

or, 0.046 = ((32n - 119.34)/(n) )/((3,119.34)/(3))

or, 0.046 = ((32n - 119.34)/(n) )/(1,039.78)

or, 47.82988 = (32n - 119.34)/(n) [Multiplying both the sides by 1,039.78]

or, 47.82988n = 32n - 119.34 [Multiplying both the sides by n]

or, 47.82988n - 32n = -119.34

or, -15.82988n = -119.34

or, n = (-119.34) ÷ (-15.82988)

Therefore, n = 7.54 years or almost 8 years.

Related Questions

Moorcroft Company’s budgeted sales and direct materials purchases are as follows:Budgeted Sales Budgeted D.M. PurchasesApril $327,000 $42,000May 292,000 51,000June 407,000 61,000Moorcroft’s sales are 40% cash and 60% credit. Credit sales are collected 20% in the month of sale, 50% in the month following sale, and 26% in the second month following sale; 4% are uncollectible. Moorcroft’s purchases are 50% cash and 50% on account. Purchases on account are paid 40% in the month following the purchase and 60% in the second month following the purchase.Instructions: (a) Prepare a schedule of expected collections from customers for June. (b) Prepare a schedule of expected payments for direct materials for June. (c) Moorcroft's assistant controller suggested that Moorcroft hire a part-time collector to encourage customers to pay more promptly and to reduce the amount of uncollectible accounts. Sales are still 40% cash and 60% credit but the assistant controller predicted that this would cause credit sales to be collected 30% in the month of the sale, 50% in the month following sale, and 18% in the second month following sale; 2% are uncollectible. Prepare a schedule of expected collections from customers for June How did these changes impact cash collections? Would it be worth paying the collector $1,000 per month? (d) The assistant controller also suggested that the company switch their purchases to 40% cash and 60% on account to help stretch out their cash payments. There is no additional interest charge to do this and Moorcroft is still paying their bills on time. There is no change to the company's payment pattern. Prepare a schedule of expected payments for direct materials for June. How did these changes impact the cash payments for June?
SWH Corporation issued bonds on January 1, 2004. The bonds had a coupon rate of 5.5%, with interest paid semiannually. The face value of the bonds is $1,000 and the bonds mature on January 1, 2019. What is the yield to maturity for an SWH Corporation bond on January 1, 2010 if the market price of the bond on that date is $950
9. Two countries: US and Mexico. Two goods: Airplane and car. A US worker's MPL is 20 times higher than a Mexican worker in making an airplane. A US worker's MPL is 5 times higher than a Mexican worker in making a car. Which country has absolute advantage in making cars and why
The operations manager at a chemical company that produces insecticide for use in commercial applications is attempting to set a safety stock level for a key ingredient that is used in their most powerful product. She believes that demand during lead time for this ingredient is normally distributed based on past data. In addition, she believes that future use is accurately depicted by these historical demand-duringlead-time data (in gallons): 55, 75, 75, 70, 80, 60, 50, 70, 60, and 85. She estimates the standard deviation of demand during the lead time to be 8.5 gallons. a. What is the average demand during the lead time for this key ingredient? b. What is the safety stock they need to provide a 95% service level? c. What is the order point the company should use?
Brainliest for anyone if they get this CORRECT.

What insight does ROI give into investment performance? Is it acceptable to lose profit on one product, if that product is vital to the sale of an extremely profitable product? Why?

Answers

Answer:

Explanation:

Return on investment (ROI) can be defined as a performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of investments.

The ability to calculate return on investment is particularly valuable for any business regardless of its size or industry. by calculating ROI, an individual can understand how well their business is doing and which areas needs improvement.

Every business decision requires knowldge of ROI, so as to optimize profitability. Yes it is acceptable to loose profit of one product for the sale of a profitable product because the gain that would be derived by selling an extremely profitable products is better for the company that the gain one product will derive. Afterall, every company wants to increase profitability.

They accept deposits from savers and make loans to people who need it. They provide various services, such as checking accounts and money market transactions, to facilitate capital exchange between savers and people who need it.

Answers

Answer:

The correct answer is: Commercial banks.

Explanation:

Commercial banks are financial institutions that accept deposits, offer checking account services, make business, personal, and mortgage loans and offer basic financial products such as Certificates of Deposit (CD) or savings accounts to a private individual and small businesses facilitating transactions between them.

A manufacturing company that has only one product has established the following standards for its variable manufacturing overhead. The company bases its variable manufacturing overhead standards on direct labor-hours. Standard hours per unit of output 5.30 DLHs Standard variable overhead rate $ 11.66 per DLH The following data pertain to operations for the last month: Actual direct labor-hours 8800 DLHs Actual total variable manufacturing overhead cost $ 96,000 Actual output 1500 units What is the variable overhead rate variance for the month

Answers

Answer:

$9,911 Unfavorable

Explanation:

Calculation for What is the variable overhead rate variance for the month

First step is to calculate the Standard labor hours Using this formula

Standard labor hours = Actual output x Standard hours per unit of output

Let plug in the formula

Standard labor hours= 1500 x 5.30

Standard labor hours= 7,950

Now let calculate the Variable overhead efficiency variance using this formula

Variable overhead efficiency variance = Actual labor hours - Standard labor hours) x hourly rate for standard variable overhead

Let plug in the formula

Variable overhead efficiency variance= ( 8,800-7,950) x 11.66

Variable overhead efficiency variance=850×11.66

Variable overhead efficiency variance= $9,911 Unfavorable

Therefore the variable overhead rate variance for the month is $9,911 Unfavorable

North Carolina State University Irwin College of Engineering can earn 4% on its investments, how much should be in its savings account to fund one $5,000 scholarship each year for the next 10 years?

Answers

Answer:

The amount that should be in its savings account is $40,554.48.

Explanation:

To calculate this, formula for calculating the present value of an ordinary annuity is employed as follows:

PV = P * [{1 - [1 / (1 + r)]^n} / r] …………………………………. (1)

Where;

PV = Present value of or amount in the saving =?

P = yearly scholarship payment = $5,000

r = interest rate = 4%, 0.04

n = number of years = 10

Substitute the values into equation (1) to have:

PV = $5,000 * [{1 - [1 / (1 + 0.04)]^10} / 0.04]

PV = $5,000 * [{1 - [1 / 1.04]^10} / 0.04]

PV = $5,000 * [{1 - 0.961538461538461^10} / 0.04]

PV = $5,000 * [{1 - 0.675564168825795} / 0.04]

PV = $5,000 * [0.324435831174205 / 0.04]

PV = $5,000 * 8.11089577935512

PV = $40,554.48

Therefore, the amount that should be in its savings account is $40,554.48.

Final answer:

The present value of an annuity formula can be used to determine the amount needed in the savings account.

Explanation:

To determine how much should be in its savings account to fund one $5,000 scholarship each year for the next 10 years, we can use the formula for the present value of an annuity. The formula is:

PV = PMT * ((1 - (1 + r)^(-n)) / r)

Where PV is the present value, PMT is the payment amount, r is the interest rate, and n is the number of periods. In this case, the payment amount is $5,000, the interest rate is 4% (or 0.04), and the number of periods is 10. Plugging these values into the formula, we get:

PV = $5,000 * ((1 - (1 + 0.04)^(-10)) / 0.04) = $42,179.84

Therefore, North Carolina State University's Irwin College of Engineering should have $42,179.84 in its savings account to fund one $5,000 scholarship each year for the next 10 years.

Learn more about present value of an annuity here:

brainly.com/question/32281434

#SPJ11

Last month Jim purchased $10,000 of U.S. Treasury bonds (their face value was $10,000). These bonds have a 30-year maturity period, and they pay 1.5%interest every threemonths (i.e., theAPRis 6%, and Jim receives a check for $150 every three months). But interest rates for similar securities have since risen to a 7% APR because of interest rate increases by the Federal Reserve Board. In view of the interest-rate increase to 7%, what is the current value of Jim’s bonds?

Answers

The current value of Jim's bonds are $8,749.57.

What is the value of Jim's bonds?

The value of the bond can be determined by calculating the present value of the cash flows of the bonds. The present value is the sum of discounted cash flows.

Value of the bond = present value of coupon payments + present value of the face value of the bond at maturity.

Present value of the face value of the bond at maturity = $10,000 / (1 + 0.0175^120) = $1247.01

Present value of coupon payments = future value / (1 + 0.07^30)

Future value = amount x annuity factor

Annuity factor = {[(1+r)^n] - 1} / r

Where:

  • Amount = 1.5% x 10,000 = $150
  • r = interest rate = 7%/4

n = number of years = 30 x 4 = 120

$150 x [({1.0175^120) - 1} / 0.0175]  = $60,164.43

Present value = $60,164.43 / (1.0175^120) = $7,502.56

Value of the bond = $7,502.56 + $1247.01 =$8,749.57

To learn more about present value, please check: brainly.com/question/26537392

Answer:

current value is $8749.57

Explanation:

given data

face value = $10,000

maturity period = 30 = 30 × 4 = 120

interest = 1.5% every 3 month

solution

we will apply here bond price formula that is

bond price = coupon × (1 - ((1)/((1+r)^n)))/(r) + (face value)/((1+r)^n)          ............................1

here r is rate and n is no of period and

so rate = (7)/(4) = 1.75% = 0.0175

and  coupon is $150

put here value

bond price = $150 × (1 - ((1)/((1+0.0175)^(120))))/(0.0175) + (10000)/((1+0.0175)^(120))  

bond price = 8749.57

so current value is $8749.57

Five years ago, a company made a $5 million investment in a new high-temperature material. the product was not well accepted after the first year on the market. however, when it was reintroduced 4 years later, it did sell well during the year. major research funding to broaden the applications has cost $15 million in year 5. using a net present worth balancing equation and a manual iteration process, find the rate of return for the cash flows listed below.

Answers

What's the rate for cash flows listed? Can't answer it without it
Other Questions
Consumption expenditures $800Investment expenditures 200Government purchases 300Exports 100Imports 200Wages 800Refer to Table above. Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equalsA) $2,200.B) $1,600.C) $1,400.D) $1,200
Robert House believed that a leader cannot move back and forth among the four leadership styles: directive, supportive, achievement-oriented, and participative. a) True b) False
Banc Corp. Trust is considering either a bankwide overhead rate or department overhead rates to allocate $396,000 of indirect costs. The bankwide rate could be based on either direct labor hours (DLH) or the number of loans processed. The departmental rates would be based on direct labor hours for Consumer Loans and a dual rate based on direct labor hours and the number of loans processed for Commercial Loans. The following information was gathered for the upcoming period: Department DLH Loans Processed Direct Costs Consumer 14,000 700 $ 280,000 Commercial 8,000 300 $ 180,000 Banc Corp. Trust estimates that it costs $400 to analyze and close a commercial loan. What is the overhead rate if Banc Corp. Trust allocates the remaining indirect costs using direct labor hours? Multiple Choice a. $12.55 per hour.b. $18.00 per hour. c. $1,000 per loan. d. $800 per loan.
Shen has plans to go to an opera and already has a $100 nonrefundable, nonexchangeable, and nontransferable ticket. Now Valerie, whom Shen has wanted to date for a long time, asks him to a party. Shen would prefer to go to the party with Valerie and forgo the opera, but he doesn't want to waste the $100 he spent on the opera ticket. From the perspective of an economist, if Van decides to go to the party with Amy, what has he just done?1. Incorrectly allowed a sunk cost to influence his decision2. Made a choice that was not optimal3 Correctly ignored a sunk cost