Question

A. Several years ago, castles in the sand inc issued bonds at face value of $1000 at a yield to maturity of 6.6%.

Now with 8 year left until the maturity of the bonds, the company has run into hard times and the yield to maturity on the bonds has increased to 13%. What is the price of the bond now? (assume semiannual coupon payments) dont not round round intermediate calculations. Round answer 2 decimal places

B. Suppose that onvestors believe that Castles can make good on the promised coupon payments but the company will go bankrupt when the bond matures and the principal comes due. The expectation is that investors will receive only 86% of face value at maturity. If they buy the bond today. What yield to maturity do they expect to receive? dont not round round intermediate calculations. enter your answer as a percent rounded to 2 decimal places

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Question

Microbotics currently sells all of its frozen dinners cash on delivery but believes it can increase sales by

offering supermarkets 1 month of free credit. The price per carton is $100, and the cost per carton is $65. The unit sales will increase from 1,050 cartons to 1,110 per month if credit is granted. Assume all customers pay their bills and take full advantage of any credit period offered.

C) Assume the interest rate is 1.5% per month but the firm can offer the credit only as a special deal to new customers, while existing customers will continue to pay cash on delivery. What will be the change in the firm’s total monthly profits on a present value basis under these conditions? ( Do not round intermediate calculations. Round your answers to 2 decimal places.)

Change in total monthly profit =

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