Masters Corp. issues two bonds with 20-year maturities. Both bonds are callable at $1,050. The first bond is issued at a deep discount with a coupon rate of 4% and a price of $580 to yield 8.4%. The second bond is issued at par value with a coupon rate of 8.75%. a. What is the yield to maturity of the par bond and why? Why is it higher than the yield of the discount bond? b. If you expect rates to fall substantially in the next two years, which bond would prefer to hold?

I need a detailed answer for 10 marks

You lease a car with a $600 down payment (due at the start of the lease), 48 monthly payments of $553 (first payment due one month from today), and a $12,000 residual value. You plan to keep the car for 6 years total and sell it for an estimated $7,000. If your cost of capital is an APR of 4.8% (compounded monthly), what is the net cost of the lease including the effects of down payment, lease payments, residual value, and estimated $7,000 resale price? Round and express your answer to the nearest whole dollar (i.e., nearest integer).

Assume the following information for a company that produced 10,000 units and sold 8,000 units during its first year of operations and produced 8,000 units and sold 10,000 units during its second year of operations:

Using absorption costing, what is the cost of goods sold for the second year of operations?

Multiple Choice

• $1,780,000

• $1,795,000

• $1,406,000

• $1,486,000

Coney Island Entertainment issues $1,500,000 of 5% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year.

Calculate the issue price of a bond and complete the first three rows of an amortization schedule when:

Required:
1. The market interest rate is 5% and the bonds issue at face amount. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Do not round interest rate factors. Round your answers to nearest whole dollar.)

Coney Island Entertainment issues $1,500,000 of 5% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year.

Calculate the issue price of a bond and complete the first three rows of an amortization schedule when:

2. The market interest rate is 6% and the bonds issue at a discount. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Do not round interest rate factors. Round your answers to nearest whole dollar.)

Coney Island Entertainment issues $1,500,000 of 5% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year.

Calculate the issue price of a bond and complete the first three rows of an amortization schedule when:

3. The market interest rate is 4% and the bonds issue at a premium. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Do not round interest rate factors. Round your answers to nearest whole dollar.)

Suppose the Fed increases interest rates in the country.

a. Which curve shifts first and why? Graph the Goods and Services market, including the shift.

b. What happened to the price level and RGDP in the short-run? What type of business cycle did this cause?

c. Over time, what will eventually happen to resource costs given the above scenario?

d. From your answer in part c, what subsequent shift will occur? Indicate this shift using your graph given above. What is the ultimate long-run effect on the Deflator and RGDP?

Phoenix Industries has pulled off a miraculous recovery. Four years ago it was near bankruptcy. Today, it announced a $3 per share dividend to be paid a year from now, the first dividend since the crisis. Analysts expect dividends to increase by $1 a year for another 2 years. After the third year (in which dividends are $5 per share) dividend growth is expected to settle down to a more moderate long-term growth rate of 6%. If the firm’s investors expect to earn a return of 14% on this stock, what must be its price?

The optimal solution of the linear programming problem is at the intersection of constraints 1 and 2. Please answer the following questions by using graphical sensitivity analysis.

Max s.t.

Max 2x1 + x2
s.t. 4x1 +1x2 ≤8

4x1 +3x2 ≤12

1x1 +2x2 ≤6

x1 , x2 ≥ 0

Over what range can the coefficient of x1 vary before the current solution is no longer optimal?

Over what range can the coefficient of x2 vary before the current solution is no longer optimal?

Compute the dual price for the first constraint.

3. Masters Corp. issues two bonds with 20-year maturities. Both bonds are callable at $1,050 in two years. The first bond is issued at a deep discount with a coupon rate of 4% and a price of $600 to yield 11.03%. The second bond is issued at par value with a coupon rate of 10%. Coupon is paid annually

a) What is the YTM of the par bond?

b) If you expect rates to fall to 5% in the next 2 years, would any bond be called (redeemed before maturity), if any? What do you expect be the yield of this bond (yield to call)