This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Petty Productions Inc. recently issued 30-year 1,000 face value, 12 annual coupon bonds. The market ... (Read 115 times)

mckennatimberlake

  • Hero Member
  • *****
  • Posts: 559
on: Jul 10, 2018
Petty Productions Inc. recently issued 30-year 1,000 face value, 12 annual coupon bonds. The market discount rate for this bond is only 7. What is the current price of this bond?
 
  A) 387.59
  B) 597.24
  C) 1,000.00
  D) 1,620.45

Question 2

Howton Mining expects to have credit sales of 8,000,000 this year. First National Bank is offering Howton
  Mining a lock-box system for 1,200 per month. Howton Mining estimates that the new lock-box system will
  reduce float by 4.5 days.
 
  What rate of return must Howton Mining earn on its marketable securities to make it
  worthwhile for the company to institute this lock-box system? Use a 365-day year.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

meow1234

  • Sr. Member
  • ****
  • Posts: 333
Reply #1 on: Jul 10, 2018
Answer to Question 1

Answer: D
Explanation: D)
Bond Price = PMT  +
= 120  + = 1,620.45.
MODE = END
INPUT 30 7 0 -120 -1,000
KEY N I/Y PV PMT FV
CPT 1,620.45

Answer to Question 2

Rate of return earned on marketable securities
Income = 8,000,000
365  4. 5 days  rate = 1,200  12
Rate of Return = 14,400
(8,000,000/365  4. 5) =
14,400
98,630 = .146


mckennatimberlake

  • Member
  • Posts: 559
Reply 2 on: Jul 10, 2018
:D TYSM

meow1234

  • Member
  • Posts: 333
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

« previous next »
 

Did you know?

Anti-aging claims should not ever be believed. There is no supplement, medication, or any other substance that has been proven to slow or stop the aging process.

Did you know?

Astigmatism is the most common vision problem. It may accompany nearsightedness or farsightedness. It is usually caused by an irregularly shaped cornea, but sometimes it is the result of an irregularly shaped lens. Either type can be corrected by eyeglasses, contact lenses, or refractive surgery.

Did you know?

In the ancient and medieval periods, dysentery killed about ? of all babies before they reach 12 months of age. The disease was transferred through contaminated drinking water, because there was no way to adequately dispose of sewage, which contaminated the water.

Did you know?

Since 1988, the CDC has reported a 99% reduction in bacterial meningitis caused by Haemophilus influenzae, due to the introduction of the vaccine against it.

Did you know?

In 2006, a generic antinausea drug named ondansetron was approved. It is used to stop nausea and vomiting associated with surgery, chemotherapy, and radiation therapy.

Bones of the Face and Skull (Lateral View) Bones of the Face and Skull (Lateral View)
A Recently Discovered Member of the Local Group A Recently Discovered Member of the Local Group
Eighteen-year-olds were the largest age cohort in the first year of the war in both armies. Soldiers Eighteen-year-olds were the largest age cohort in the first year of the war in both armies. Soldiers
Bell’s palsy, showing typical drooping of one side of the face. Bell’s palsy, showing typical drooping of one side of the face.
Sample budget spreadsheet form for first year of business. Sample budget spreadsheet form for first year of business.
Video: Cardiac Cycle (Part 3 of 4)

For a complete list of videos, visit our video library