Market enterprises would like to issue bonds

Asked by maham237 @ 12/01/2021 in Business viewed by 340 People

Market Enterprises would like to issue $1,000 bonds and needs to determine the approximate rate it would need to pay investors. A firm with similar risk recently issued bonds with the following current features: a 5% coupon rate, 10 years until maturity, and a current price of $1,170.50. At what rate would Market Enterprises expect to issue bonds, assuming annual interest payments? Please round to the closest answer. (Solve this problem using either Excel's "Goal Seek" function, plug into tvm tables, or a financial calculator.)

Answered by maham237 @ 12/01/2021

Answer:

It will use a 3% rate

Explanation:

We need to solve for the discount rate which makes the coupon payment and maturity of the similar bond equal their current market value of 1,170.50

This is done using excel goal seek tool:

$C \times \frac{1-(1+r)^{-time} }{rate} = PV\\$

C 50.00 (1,000 x 5%)

time 10 years

rate 0.030011

$50 \times \frac{1-(1+0.030011)^{-10} }{0.030011} = PV\\$

PV $426.4860

$\frac{Maturity}{(1 + rate)^{time} } = PV$

Maturity 1,000.00

time 10.00

rate 0.030011071

$\frac{1000}{(1 + 0.030011)^{10} } = PV$

PV 744.01

PV c $426.4860

PV m $744.0139

Total $1,170.5000

market rate = 0.030011071 = 3%

The procedure will be to build up the formulas and link the rates to a cell.

and then, click on the total cell and use goal seek changing the rate cell

Able, baker, and charles are engaged in the marketing to and enrollment of beneficiaries into medicare health plans. mr. able is an independent agent paid directly by a health plan. ms. baker is an independent agent paid through a field marketing organization (fmo). mr. charles is an independent agent paid for his work by a third-party marketing organization (tmo). how do the cms compensation rules apply to these three agents?

Asked by maham237 @ 13/01/2021 in Business viewed by 2747 persons

Market enterprises would like to issue bonds

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