Finance 3 questions

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  1. You purchase a 7 percent $10,000 bond for $9,400 plus $161 in accrued interest for a total outlay of $9,561. Subsequently you receive a $300 interest payment. You are in the 20 percent income tax bracket. How much tax do you owe on the interest payment? Round your answer to the nearest cent.

  2. You sell a 7 percent $10,000 bond for $9,220 plus $106 in accrued interest for a total outlay of $9,326. Soon thereafter the company makes a $250 interest payment. You are in the 20 percent income tax bracket. How much tax do you owe on the interest. Round your answer to the nearest cent.

     

  3. $2,000 bond has a coupon rate of 11 percent and matures after eight years. Interest rates are currently 8 percent. What will the price be if investors expect that the bond will be called after two years and there will be a call penalty of one year's interest? Round your answer to two decimal places

 

    • 12 years ago
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