Business, 02.11.2020 17:00 danielcano12281621

Ashes Divide Corporation has bonds on the market with 18 years to maturity, a YTM of 6.6 percent, and a current price of $1,156.50. The bonds make semiannual payments. What must the coupon rate be on these bonds

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Answer from: Bryanguzman2004

Coupon Rate = 8.1%

Explanation:

Given:

Nper = 18 x 2 = 36 semiannual

Rate = 6.6% / 2 = 3.3% semiannual

Future Value = $1,000

Present Value = $1,156.50

Find:

Coupon rate

Computation:

Annual Interest Payment = PMT(Rate,Nper,PV,FV)2

Annual Interest Payment =PMT(3.3%,36,-1156.50,1000)2

Annual Interest Payment = $80.98 = $81 (Approx)

Coupon Rate = [Annual Interest Payment / Face Value]100

Coupon Rate = [81/1000]100

Coupon Rate = 8.1%

Answer from: Quest

The correct answer is "a.grassroots movements".

Answer from: Quest

of the three mortgage options that demarco and tanya have to choose from, the balloon payment mortgage would be their best option, over adjustable payment and fixed payment plans.ultimately, the balloon payment plan would save demarco and tanya overall, in interest, would cost less monthly, and they would only have to make these payments for 8 years, opposing to 30 years for adjustable or fixed payment plans.

overall, demarco and tanya would save $80,811 if they chose balloon payments over fixed payments, and would save $116,711 if they choose balloon payments over adjustable payments. benefits with choosing fixed payments over adjustable payments is that, in the end, the payments will still be $836.30 a month, while with adjustable payments, the initial monthly payments will be $763.38 to $1082.70 a month, ultimately leading to a more costly purchase. benefits with choosing fixed payments over balloon payments are not present. benefits in choosing adjustable payments over is that it has a lower interest rate, and starts with lower monthly payments initially. benefits in choosing adjustable payments over balloon payments include a lower interest rate, and lower initial monthly payments. benefits in choosing balloon payments over fixed payments include lower interest rates, lower overall price, lower monthly payments, takes less time to pay off, and does not require a downpayment. benefits in choosing balloon payments over adjustable payments include, lower monthly payments (when averaged), takes less time to pay off, and lower overall price.

hence, option c, balloon payments, is the best option for demarco and tanya to make this purchase, for it will save them a minimum of $80811, and a maximum of $116,711.

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Ashes Divide Corporation has bonds on the market with 18 years to maturity, a YTM of 6.6 percent, an...

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