Question
In: Finance
A company has liabilities of $10,000 due in 1 year and $20,000 due in 2 years....
A company has liabilities of $10,000 due in 1 year and $20,000 due in 2 years. The company would like to cash flow match these liabilities with a combination of the following assets: a 2-year bond with annual coupons of 5% yielding 4% a 1-year bond with annual coupons of 6% yielding 3% What is the par value of the 1-year bond that should be purchased to cash flow match this portfolio? 8,300 8,500 8,800 9,000 9,400
Solutions
Answer is 8800
jeff jeffy answered 1 year agoRelated Solutions
A company has liabilities of $10,000 due in 1 year and $20,000 due in 2 years....
A company has liabilities of $10,000 due in 1 year and $20,000
due in 2 years. The company would like to cash flow match these
liabilities with a combination of the following assets:
a 2-year bond with annual coupons of 5% yielding 4%
a 1-year bond with annual coupons of 6% yielding 3%
What is the IRR on the asset portfolio created?
3.00%
3.20%
3.40%
3.60%
3.80%
Company ABC has liabilities of 20,000, 50,000, and 70,000 due at the end of years 1,...
Company ABC has liabilities of 20,000, 50,000, and 70,000 due at
the end of years 1, 2, and 3 respectively. The company would like
to exactly match these liabilities using the following assets:
A one-year zero coupon bond with a yield of 4%
A two-year zero coupon bond with a yield of 5%
A three-year coupon bond with annual coupons of 6% and a yield
of 5.5%
What is the total cost of the asset portfolio that will match
the...
A company has liabilities of $2,000 and $5,000 due at the end of years 1 and...
A company has liabilities of $2,000 and $5,000 due at the end of
years 1 and 3 respectively. The company can purchase a 1-year
$1,000 par value zero-coupon bond with an annual effective yield of
5.6% and a 3-year $1000 par value zero-coupon bond. If the cost of
exactly matching the liabilities is $6,068.36, what is the
effective yield on the 3-year bond?
Show all works, and please show ur work it with math steps and
illustrations instead of excel...
A company has liabilities of $1800 and $2150 due at the end of years 1 and...
A company has liabilities of $1800 and $2150 due at the end of
years 1 and 2 respectively. The only investments available are
1-year 5% annual coupon bonds and 2-year 6% annual coupon bonds and
both redeemable at par and with an effective yield of 3%.
What is the total cost to the company in order to exactly
(absolutely) match the assets and liabilities at a 3% annual
effective rate?
A payment of $16,000 is due in 1 year and $10,900 is due in 2 years....
A payment of $16,000 is due in 1 year and $10,900 is due in 2
years. What two equal payments, one in 3 years and one in 4 years
would replace these original payments? Assume that money earns
4.25% compounded quarterly.
Info 1. Current YTM = 8.5% 2. Liabilities at the end of 5 years = 10,000(1.085)^5...
Info
1. Current YTM = 8.5%
2. Liabilities at the end of 5 years = 10,000(1.085)^5 =
15,036.56
3. Buy the bond that has a coupon of 8%, YTM 8.5%, N = 5
Calculate -
1. Duration
2. Can you match duration of your liabilities?
3. Calculate what happens if your YTM rises by 1%
***please only answer question 2 [Can you match duration of your
liabilities?]. i will post 3 after i get the answer for 2. i
included...
Suppose that a company has a series of liabilities with the due dates as follows:: In...
Suppose that a company has a series of liabilities with the due
dates as follows:: In 6 months: $2,000,000, In 1 year: $2,200,000,
In 1.5 years: $2,500,000, In 2 years: $3,200,000, In 2.5 years:
$3,700,000, In 3 years: $4,300,000, In 3.5 years: $4,700,000, In 4
years: $5,100,000. The company is considering investing in four
different bonds: (1) a 1-year Treasury Bill with a face value of
$1,000 and no coupon, (2) a 2-year Treasury note with a face value
of...
machine X Initial cost = $100.000 Benefit/year = 20,000 for first 10 years and 10,000 for...
machine X
Initial cost = $100.000
Benefit/year = 20,000 for first 10 years and 10,000 for the next
5 years
life= 15 years
salvage value= 35000
MARR 8%
Zambrota Inc, an Italian company, is considering to facilitate
Machine X for their plant in Omaha. The benefit & cost
information for Machine X project is shown in Chart 4. The net
benefit ( Benefit – Cost ) by using PW method is
company has the following operating data for the past 2 years: Year 1 Year 2 Residual...
company has the following operating data for the past 2
years:
Year 1
Year 2
Residual Income
$600
?
Return on Investment
10%
87.5%
Required Rate of return
8%
9%
Average operating assets
?
$42,000
Sales in year 1 is $70,000 less than sales in year 2.
The Company had the same capital turnover in both years.
Q.) What is the sales margin in Year 2
Garrett Company provided the following information: Product 1 Product 2 Units sold 10,000 20,000 Price $20 ...
Garrett Company provided the following information:
Product 1
Product 2
Units sold
10,000
20,000
Price
$20
$15
Variable cost per unit
$10
$10
Direct fixed cost
$35,000
$75,000
Common fixed cost totaled $46,000. Garrett allocates common
fixed cost to Product 1 and Product 2 on the basis of sales. If
Product 2 is dropped, which of the following is true?
a.Sales will increase by $300,000.
b.Overall operating income will increase by $2,600.
c.Overall operating income will decrease by $25,000.
d.Overall...
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