This topic contains a solution. Click here to go to the answer

Author Question: Petty Productions Inc. recently issued 30-year 1,000 face value, 12 annual coupon bonds. The market ... (Read 110 times)

mckennatimberlake

  • Hero Member
  • *****
  • Posts: 559
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
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
Great answer, keep it coming :)


billybob123

  • Member
  • Posts: 336
Reply 3 on: Yesterday
Excellent

 

Did you know?

As the western states of America were settled, pioneers often had to drink rancid water from ponds and other sources. This often resulted in chronic diarrhea, causing many cases of dehydration and death that could have been avoided if clean water had been available.

Did you know?

Individuals are never “cured” of addictions. Instead, they learn how to manage their disease to lead healthy, balanced lives.

Did you know?

According to the FDA, adverse drug events harmed or killed approximately 1,200,000 people in the United States in the year 2015.

Did you know?

Excessive alcohol use costs the country approximately $235 billion every year.

Did you know?

Amphetamine poisoning can cause intravascular coagulation, circulatory collapse, rhabdomyolysis, ischemic colitis, acute psychosis, hyperthermia, respiratory distress syndrome, and pericarditis.

For a complete list of videos, visit our video library