BUSINESS COLLEGE

The zero coupon bonds of Mark Enterprises have a market price of $394.47, a face value of $1,000, and a yield to maturity of 6.87 percent based on semiannual compounding. How many years is it until this bond matures? a. 10.49 years b. 13.77 years c. 12.64 years d. 11.08 years e. 15.42 years

Answers

Answer 1

Answer:

Answer:

13.77 years

Explanation:

The maturity period is the period taken for the Bonds' Market Price equals its Face Value.

Calculation of the maturity period :

PV = - $394.47

PMT = $0

YTM = 6.87 %

P/YR = 2

FV = $1,000

N = ?

Using a financial calculator to input the values as above, the number of periods interest is accrued on the bond (N) is 27.54 thus the number of years will be 13.77 (27.54 ÷ 12) .

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A small manufacturer that makes clothespins and other household products buys new injection molding equipment for a cost of $500,000. This will allow the manufacturer to make more clothespins in the same amount of time with an estimated increase in sales of 25%. If the manufacturer currently makes 75 tons of clothespins per year, which sell at $18,000 per ton, what will be the increase in revenue next year from the new equipment?A) $837,500
B) $303,750
C) $125,000
D) $337,500

Answers

Answer:

The correct answer is D.

Explanation:

Giving the following information:

New injection molding equipment for a cost of $500,000.

Increase in sales of 25%.

The manufacturer currently makes 75 tons of clothespins per year, which sell at $18,000 per ton.

First, we need to calculate the new sales level:

New sales (units)= 75t* 1.25= 93.75 tons

Increase in sales (dollars)= (93.75 - 75)*18,000= $337,500

The Talley Corporation had taxable operating income of $495,000 (i.e., earnings from operating revenues minus all operating costs). Talley also had (1) interest charges of $40,000, (2) dividends received of $20,000, and (3) dividends paid of $25,000. Its federal tax rate was 21% (ignore any possible state corporate taxes). Recall that 50% of dividends received are tax exempt. What is the firm’s taxable income? Round your answer to the nearest dollar.

Answers

Answer: $465,000

Explanation:

To calculate the Taxable income we would have to adjust the figure for dividends received as well as interest.

Now, 50% of dividends received are taxable so let's adjust for that first,

= 20,000 * 0.5

= $10,000

$10,000 of dividends are taxable.

To calculate the Taxable income we have to use the following formula,

Taxable income = Income after operating Costs - Interest Charges + Taxable dividends

= 495,000 - 40,000 + 10,000

= $465,000

That Taxable income is therefore $465,000

Note: The dividends paid are not included here because they are taxable and already included in the Taxable operating income so including it again would amount to Double Counting.

If you need any clarification do react or comment.

Answer: Firm's taxable income = $465,000

Explanation:

GIVEN the following :

Taxable operating income = $495,000

Dividend received = $20,000

Interest charges = $40,000

Firm's taxable income =?

NOTE: 50% of dividend received is tax exempt.

Therefore,

0.5 × $20,000 = $10,000

Taxable portion of dividend received = $20,000 - $10,000

Taxable dividend = $10,000

Taxable income = (Taxable operating income + taxable dividend) - interest charges

Taxable income = ( $495,000 + $10,000) - $40,000

Taxable income = $505,000 - $40,000

Firm's taxable income = $465,000

A company's most recent free cash flow to equity was $100 and is expected to grow at 4% thereafter. The company's cost of equity is 13%. Its WACC is 7.77%. What is its current intrinsic value

Answers

Answer:

Current intrinsic value - equity = $1155.56

Explanation:

FCFE or Free cashflow to equity is the free cash flow attributable to the equity holders. Using the constant growth model of FCFE we can calculate the intrinsic value of the equity or intrinsic value per share. The formula for the constant growth model is as follows,

Value of equity = FCFE0 * (1+g) / (r - g)

Where,

FCFE0 is the most recent FCFE
g is the growth rate in FCFE
r is the required rate of return on equity

Current intrinsic value - equity = 100 * (1+0.04) / (0.13 - 0.04)

Current intrinsic value - equity = $1155.56

Mark owns a stamp collection that he is considering getting insured. Over the course of a year it will cost him $500 to keep his collection insured, but if he his collection is damaged they will pay him $1000. If he estimates there’s a 10% chance of his collection being damaged, what is the expected value of buying the insurance policy?: *

Answers

Answer:

EV = -$400

The expected value of buying the insurance policy is -$400

Explanation:

Expected value of buying the insurance policy;

EV = expected benefits - insurance cost

EV = xE - C

chances of collection being damaged x = 10% = 0.1

Insurance cost C = $500

Benefit E = $1000

Substituting the values;

EV = 0.1 × 1000 - 500 = 100 - 500

EV = -$400

The expected value of buying the insurance policy is -$400

Use the following classification to determine which category each of the following goods falls into. Goods Private Good Club Good Common Resource Public Good Museums that require admission fees Public swimming pools with free admission during summer Metered parking at a municipal parking lot Flood control Public basketball courts

Answers

Answer:

swimming pool is public good. basketball court public good. museums with admission fee are club good, metered parking public good. flood control public good

Explanation:

Jamison Company had sales revenue and operating expenses of $5,000,000 and $4,200,000, respectively, for the year just ended. If invested capital amounted to $6,000,000, the firm's ROI was:_________ A. 13.33%.
B. 83.33%.
C. 120.00%.
D. 750.00%.