Business, 23.03.2020 20:42 aly95

Big Canyon Enterprises has bonds on the market making annual payments, with 17 years to maturity, a par value of $1,000, and a price of $961. At this price, the bonds yield 8.6 percent. What must the coupon rate be on the bonds

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Answer from: MayFlowers

The coupon rate is 10.96%

Explanation:

We must firstly find the bonds coupon in order to calculate the coupon rate of the bond, which is the interest that is received by a bondholder every period as interest which in this case is to be calculated be using the future value annuity formula : Pv = C[(1-(1+i)^-n)/i]

where Pv is the Present value of the bond $961

C is the coupon payment value every year.

i is the interest rate of the bond which is 8.6%

n is the number of years the bond takes to mature which is 17 years.

now we substitute the above values to the above mentioned formula to find the coupon value of the bond C;

$961 = C[(1-(1+8.6%)^-17)/8.6%]

$961/[(1-(1+8.6%)^-17)/8.6%] = C

C = $109.61 is the coupon value or interest payment every year

now to find the coupon rate we will say the coupon value/par value of bond x 100

$109.61/$1000 x 100 = Coupon Rate

Coupon Rate = 10.96%

We use the present value annuity formula as we are given the Present value of the annuity and the yield to maturity at this price.

Answer from: Quest

Via: "if you are found to be supplying or dealing drugs, the punishment is likely to be tough. supplying drugs doesn’t just apply to dealers. if police suspect that you intend to share drugs with your friends, this is still considered to be supplying.

being suspected of supplying drugs means you are much more likely to be charged. the amount of drugs found on you, and whether you have a criminal record, will be taken into account when a punishment is being decided.

decisions to prosecute are taken by the public prosecution service. the maximum sentences for intent to supply drugs are:

- up to life in prison or an unlimited fine (or both) for a class a drug- up to 14 years in prison or an unlimited fine (or both) for a class b or class c drug."sorry if this was a school question, you didnt supply options so i assumed it was a personal question, which if it is, reconsider selling or having possesion of any drugs at all. i wish you the best!

Answer from: Quest

The government cuts taxes

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Big Canyon Enterprises has bonds on the market making annual payments, with 17 years to maturity, a...

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