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Financial principles and analysis Student name Professor Course Date Question one Solution: Start with drawing a time line. 0.5 1.5 2.5 3.5 4.5 5.5 6.5 7.5 8.5 9.5 10.5 11.5 12.5 13.5 14.5 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 (1) 11 coupon (2) 13 coupon payments (annuity) payments (annuity) (3) FV ($1 000) + missed coupons ($210) 383539-166433500770889-1664335001156969-1664335001928494-1664335002703194-1664335003089909-1664335003477259-1664335003863974-1664335004251324-1664335004638674-1664335005025389-1664335005412739-1664335005799454-16643350060763151333501971040-3803654269740-380365 Coupon rate = (7%/2) = 3.5% Bond yield per period = (13%/2) = 6.5% Total number of periods to maturity = 15 * 2 = 30 PV of this bond = PV (first 11 coupon payments) + PV (later 13 coupon payments) + PV (Face Value + missed 6 coupons) Price o=35{1-(1.0650) ^-11} +35{1-(1.065) ^-13} +1000+210 0.065 0.065 (1+0.065) ^30 (1+0.065)^17 =269.1165+103.1835+182.9351 =$555.24 Question 2 The required rate of return that will make the present value of the dividends been evaluated per unit= Variable production costs per copy sold + Variable marketing costs=4+1=5 Contribution margin per unit= price- variable cost Contribution margin=24.5-5= $19.5 Breakeven point is the point at which revenue is equal to zero that is TR=TC Breakeven point in units is given by= fixed costs/contribution margin Breakeven point=400000/19.5= 20 512.82 phones For target profit let’s say $2 million the units that should be sold are calculated as follows Units = (target profit + fixed cost)/contribution margin Units= (2000000+400000)/19.5 Units=2400000/1905 Units= 123 076.9 units The technique suffers from most of the assumptions made which are not realist. For instance the technique assumes that the costs are definitely divided into fixed and variable costs only which is not the case. More so most of the data used is based on estimates thus it lacks accuracy and also precision 60261513779500 CVP Revenue 6248401143000 Total cost 6057901143000 2225040787400062484013525500vc 5867408445500 Fixed cost 59626526543000 [...]
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I am a student of MPA and I want to get at least 90% marks in this assignment. Please make sure I'll make it best
Subject Area: Finance
Document Type: Personal Statement
