Business, 25.06.2020 05:01 letsgetcookingblog

Six years ago, James Corporation sold a $100 million bond issue to expand its facilities. Each debenture has a $1,000 par value, an original maturity of 20 years (there are now 14 years left to maturity), and an annual coupon rate of 11.5% with semiannual payments. If you require a 14% return, what price would you pay today for a James bond?

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Answer from: therealnana

Price of Bonds=$848.286

Explanation:

The value of the bond is the present value (PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV) discounted at the yield rate

Value of Bond = PV of interest + PV of RV

The value of bond for James Corporation can be worked out as follows:

Step 1

PV of interest payments

PV = A × (1+r)^(-n)/r

A- semiannual interest payment, n-number of periods, r- semi annul yield

A-semi- annul interest payment:

=11.5%× 1,000× 1/2 = 75

r-semi-Annual yield = 14%/2 = 7%

n-Maturity period =1 4 × 2= 28

PV of interest payment:

=57.5 × (1- (1+0.07)^(-28)/0.07)

= 697.88

Step 2

PV of Redemption Value

= 1,000 × (1.07)^(-28) = 150.40

Step 3

Price of bond

=697.88 + 150.40

=$848.286

Answer from: Quest

1 all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know

Answer from: Quest

You have to buy paper to but into the scanner

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Six years ago, James Corporation sold a $100 million bond issue to expand its facilities. Each deben...

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