Question
1 a. Kirby Railroad Co. is about to issue $ 255 , 000 of 9 -year bonds paying a 12 % interest rate, with interest
1a. Kirby Railroad Co. is about to issue $255,000 of 9-year bonds paying a 12% interest rate, with interest payable semiannually. The discount rate for such securities is 18%.
(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
How much can Kirby expect to receive for the sale of these bonds? (Round answer to 2 decimal places, e.g. 25.50.)
1b. Pendley Company is considering purchasing equipment. The equipment will produce the following cash flows: Year 1, $42,800; Year 2, $44,900; and Year 3, $57,300. Pendley requires a minimum rate of return of 11%.
(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
What is the maximum price Pendley should pay for this equipment? (Round answer to 2 decimal places, e.g. 25.25.)
1c. Kelly Reading invests $17,446.21 now for a series of $2,600 annual returns beginning one year from now. Kelly will earn a return of 8% on the initial investment.
(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
How many annual payments of $2,600 will Kelly receive? (Hint: Use Table 4.) (Round answer to 0 decimal places, e.g. 25.)
1d. Julie Vopat wishes to invest $22,388.90 on July 1, 2014, and have it accumulate to $53,100 by July 1, 2024. Use a financial calculator to determine at what exact annual rate of interest Julie must invest the $22,388.90. (Round answer to 2 decimal places, e.g. 25.25%.)
Answer: Annual rate of interest ______%
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