MKR issued a series of bonds today that pay annual coupons The
Anonymous Student
Subject:Accounting
MKR issued a series of bonds today that pay annual coupons. The bonds have a face value of $1,000, a 10% coupon rate per annum and will mature in 12 years. The yield to maturity (YTM) of a similar bond is 8%. What is the value of the bond today? (a) $397.11 (b) $1,000 (c) $863.73 (d) $753.61 (e) $1,150.72
Answer
- Discover more from:
Related Answered Questions
- Financial Accounting (ACF2100)Assume material is added at the beginning of a process, and the beginning WIP inventory is 30 per cent complete as to conversion costs. Using the weighted average method of costing, the total equivalent units for material for this process during this period is equal to: Question 7Answer a. units started this period in this process b. beginning inventory this period for the process c. units started this period in this process plus the beginning inventory d. units started this period in this process plus 70 per cent of beginning inventoryAnswers
- Financial Accounting (ACF2100)The level of activity within which fixed costs remain unchanged is called the: Question 5Answer a. relevant range b. activity range c. extreme range d. relevant range AND activity rangeAnswers
- Financial Accounting (ACF2100)
Victoria Chemicals are considering replacing their existing machine with a new, more efficient one. The old machine was purchased 4 years ago for $33,000,000 and had an estimated useful life of 6 years; it can be sold today for $15,000,000. The new machine will cost $50,000,000 but will have a 8 year life and scrap value at the end of the 8 years of $7,000,000. The new machine will require shipping and installation costs of $2,000,000 each. Victoria Chemicals depreciate all assets straight-line over their useful life and pay tax at the company rate of 30%. What is the initial investment at t=0 associated with the incremental decision of selling the old machine and buying the new machine? (a) ($35,000,000) (b) ($39,000,000) (c) ($40,200,000) (d) ($50,000,000) (e) ($54,000,000)
Answers - Financial Accounting (ACF2100)
Assume that the current dividend per share (which has been paid) for ACD Ltd is $0.90 and that the required rate of return on these shares is 15% p.a. If the current stock price is $19.80, the expected constant growth rate in dividends implied by this information is closest to: (a) 0.0% (b) 5.0% (c) 7.5% (d) 10.0% (e) 15.0%
Answers - Financial Accounting (ACF2100)
Six years ago your friend borrowed $150,000 on an amortizing loan for a ten-year period at an interest rate of 12% p.a. with interest compounded on an annual basis. She has been making regular annual payments on the loan and now wishes to repay in full the amount outstanding on this loan. The total amount she will need to repay is closest to: (a) $73,543 (b) $80,634 (c) $88,058 (d) $95,879 (e) $106,191
Answers - Financial Accounting (ACF2100)
Eureka Industries is experiencing a period of rapid growth in its earnings and profitability. Earnings and dividends are expected to grow at a rate of 20% p.a. during the next two years, at 15% p.a. in the third year, and at a constant rate of 8% p.a. thereafter. Eureka’s most recent dividend per share was $1.00, and the required rate of return on the stock is 12% p.a. Meredith Gray, an analyst with USB Financial, has asked you to estimate the price at which Eureka’s stock should be selling for today based on the above information. The estimated price should be closest to: (a) $31.83 (b) $34.04 (c) $35.22 (d) $44.71 (e) $47.23
Answers