Company Q issues a 10 year $5,000,000 bond on 1/1/04. The coupon rate is 5%. Market rate of interest is 7%. Interest is paid annually on every 12/31.
a) Calculate the annual interest that the bond would pay.
b) What is the value of the bond?
c) Is this bond sold at a discount or premium? Why?
3) You wish to open a new shoe store at the Galleria. You will sell shoes at an average price of $25. The shoes cost you an average cost of $5 per pair. You anticipate that fixed costs for the first year will run $250,000.
a) How many pairs of shoes will you have to sell in the first year of operation(round to whole pairs)?
b) How much total revenue does this result in for you?
c) If you want a profit of $90,000 for the first year, how many pairs of shoes must you sell?
d) What is the total revenue given the requirement in c?