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Q5) On February 2, 2016, an investor held some Province of Ontario stripped coupons in a self-administered RRSP at Scotia McLeod, an investment dealer. Each
Q5) On February 2, 2016, an investor held some Province of Ontario stripped coupons in a self-administered RRSP at Scotia McLeod, an investment dealer. Each coupon represented a promise to pay $80 at the maturity date on January 13,2023 , but the investor would receive nothing until then. The value of the coupon showed as $70 on the investor's screen. This means that the investor was giving up $70 on February 2, 2016, in exchange for $80 to be received just less than seven years later. Based upon the $70 price, what rate was the yield on the Province of Ontario bond? Q4) The most recent financial statements for your company are as follow: Sales for 2021 are projected to grow by 20%, Interest expense will remain constant; Tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, and accounts payable increase spontaneously with sales. If the firm is operating at only 65% capacity, and no new debt or equity is issued, what external financing is needed to support the growth rate in sales
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