ACCOUNTING AND FINANCIAL ENGINEERING - EXAMPLE 34.7 : An engineering investor purchases a $1000 bond that matures in 25 years. The coupon rate is 8 %. The purchase price is at 95 or 95 % of the par bond value. (a) What is the purchase price of the bond? (b) How much discount is enjoyed by the investor on average each year? (c) Find the income generated from coupon rate each year. (d) Find the overall interet rate or Yield to Maturity (YTM) by using the formula : YTM = [ Answer in (c) + Answer in (b) ] x 200 / [ par bond value + Answer in (a) ].



ACCOUNTING AND FINANCIAL ENGINEERING - EXAMPLE 34.7 : An engineering investor purchases a $1000 bond..

Answer / kangchuentat

ACCOUNTING AND FINANCIAL ENGINEERING - ANSWER 34.7 : (a) Purchase price = 0.95 x par bond value = 0.95 x $1000 = $950. (b) Annual discount = (total discount) / (25 years) = (0.05 x par bond value) / 25 = 0.05 x $1000 / 25 = $2. (c) Annual coupon rate payment = par value x coupon rate = $1000 x 0.08 = $80. (d) YTM = [ Answer in (c) + Answer in (b) ] x 200 / [ par bond value + Answer in (a) ] = (80 + 2) x 200 / (1000 + 950) = 8.41 %. The answer is given by Kang Chuen Tat; PO Box 6263, Dandenong, Victoria VIC 3175, Australia; SMS +61405421706; chuentat@hotmail.com; http://kangchuentat.wordpress.com.

Is This Answer Correct ?    0 Yes 0 No

Post New Answer

More Chemical Engineering Interview Questions

ENGINEERING ECONOMY - EXAMPLE 7.2 : In the purchase of a machine with a period n = 8.5 years, the minimum attractive rate of return, i = 12 %, the cost P = $55000, F = $4000 is the salvage, annual maintenance A = $3500. The return of the investment or equivalent uniform annual benefit is $15000. The equivalent uniform annual cost is P (A / P, i, n) + A - F (A / F, i, n). The investment is considered acceptable only when equivalent uniform annual benefit is greater than the equivalent uniform annual cost. From the compound interest table, (A / P, i = 12 %, n = 8 years) = 0.2013, (A / P, i = 12 %, n = 9 years) = 0.1877, (A / F, i = 12 %, n = 8 years) = 0.0813, (A / F, i = 12 %, n = 9 years) = 0.0677. Prove by calculations whether the investment above is acceptable.

1 Answers  


Explain what is a quick way to calculate frictional pressure drops in carbon steel pipe?

0 Answers  


Question 70 - According to Adolf Eugen Fick (1829 - 1901) : rate of diffusion v increases with less wall thickness t, increased area A and decreased molecular weight of a fluid M. The diffusion constant D decreased with increasing M. (a) By assuming v, t, dP, A, M and D changes proportionally of each other, find the equation of v as a function of t, dP, A and D. (b) The ratio of self diffusion constant D, at T = 273 K and P = 0.1 MPa, for gases B and C are 1.604 : 0.155. If only 2 gases exist in such a system : hydrogen and nitrogen, find the type of gas for B and C with reference to their molecular weights M. (c) By using the equation of kinetic energy 0.5 MV = constant where V = square of v, find the ratio of V for B and V for C, or V(B) / V(C), as a function of M(B) and M(C), where M(B) is molecular weight of B and M(C) the molecular weight of C : Graham's Law of Diffusion.

1 Answers  


Which chemical is used as antiscalent in RO water treatement plant?

3 Answers   Dalkia, Power Plant,


How LPG gets liquefied by elevating the pressure?If the pressure is increased the temperature also increases,then how LPG is in liquid form?

1 Answers  






Explain the method adopted to minimize shell side pressure drop in a shell?

0 Answers  


How much will be the increment for postal assistant yearly?

0 Answers  


Can anyone tell me how to calculate the quantity of a third component added in an azeotropic batch distillation of a known quantity of azeotropic mixture?

1 Answers  


Explain what is the method involved in analyzing powders for composition?

0 Answers  


What is some good advice for specifying allowable pressure drops in shell and tube exchangers for heavy hydrocarbons?

0 Answers  


What is an effective means of removing silicon from aluminum?

0 Answers  


ACCOUNTING AND FINANCIAL ENGINEERING - EXAMPLE 34.34 : A biochemical engineering company has stock P = 20,000 shares of M % preferred stock of Q = $100 par and N number of shares of $20 par common stock. In year 1 : $10,000 is distributed as dividend. In year 2 : $25,000 is distributed as dividend. Let (Total Dividend) = (Dividend for Preferred Stock) + (Dividend for Common Stock). (a) In year 1, calculate the amount distributed as dividend for preferred stock, when no dividend was distributed for common stock. (b) In year 2, the amount distributed for common stock was $5000. Find the values of M and N, when the dividend per share for common stock is $0.05.

1 Answers  


Categories
  • Civil Engineering Interview Questions Civil Engineering (5085)
  • Mechanical Engineering Interview Questions Mechanical Engineering (4451)
  • Electrical Engineering Interview Questions Electrical Engineering (16632)
  • Electronics Communications Interview Questions Electronics Communications (3918)
  • Chemical Engineering Interview Questions Chemical Engineering (1095)
  • Aeronautical Engineering Interview Questions Aeronautical Engineering (239)
  • Bio Engineering Interview Questions Bio Engineering (96)
  • Metallurgy Interview Questions Metallurgy (361)
  • Industrial Engineering Interview Questions Industrial Engineering (259)
  • Instrumentation Interview Questions Instrumentation (3014)
  • Automobile Engineering Interview Questions Automobile Engineering (332)
  • Mechatronics Engineering Interview Questions Mechatronics Engineering (97)
  • Marine Engineering Interview Questions Marine Engineering (124)
  • Power Plant Engineering Interview Questions Power Plant Engineering (172)
  • Textile Engineering Interview Questions Textile Engineering (575)
  • Production Engineering Interview Questions Production Engineering (25)
  • Satellite Systems Engineering Interview Questions Satellite Systems Engineering (106)
  • Engineering AllOther Interview Questions Engineering AllOther (1379)