Business, 07.07.2020 16:01 Jduxn

Assume that a bond makes 10 equal annual payments of $1,000 starting one year from today. The bond will make an additional payment of $100,000 at the end of the last year, year 10. (This security is sometimes referred to as a coupon bond.) If the discount rate is 3.5$% per annum, what is the current price of the bond? (Hint: Recognize that this bond can be viewed as two cash flow streams: (1) a 10-year annuity with annual payments of $1,000, and (2) a single cash flow of $100,000 arriving 10 years from today. Apply the tools you've learned to value both cash flow streams separately and then add.)

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Answer from: jayy2x41

Based on the information given, the current price of the bond will be $71721.66

The current price of the bond is calculated thus:

Cash flow = $1000Annuity factor = 0.83166Discounted cash flow = $1000 × 0.83166 = $831.66

Also for 10 years, the discounted cash flow will be:

= $100000 × 0.7089 = $70890

The current bond price will be:

= $70890 + $831.66

= $71721.66

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Answer from: googoomylizard

$79,208.48

Explanation:

The computation of the current price of the bond is shown below:-

Number of Cash flow PV annuity factor Discounted cash

years flow

1 -10 years $1,000 8.3166 $8,316.6

10 years $100,000 0.7089188 $70,891.88

Current price of the bond $79,208.48

Refer to the PV annuity factor so that we get to know the discounting factor value.

Answer from: Quest

simpleton is the answer, this is simpleton work

Answer from: Quest

The business cycle is the periodic but irregular up-and-down movement in economic activity, measured by fluctuations in real gross domestic product (gdp) and other macroeconomic variables. a business cycle is typically characterized by four phases—recession, recovery, growth, and decline—that repeat themselves over time. economists note, however, that complete business cycles vary in length. the duration of business cycles can be anywhere from about two to twelve years, with most cycles averaging six years in length. some business analysts use the business cycle model and terminology to study and explain fluctuations in business inventory and other individual elements of corporate operations. but the term "business cycle" is still primarily associated with larger (industry-wide, regional, national, or even international) business trends.

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Assume that a bond makes 10 equal annual payments of $1,000 starting one year from today. The bond w...