Tony's Pizzeria Plans to Issue Bonds with a Par Value

question 51

Multiple Choice

Tony's Pizzeria plans to issue bonds with a par value of R1,000 and 10 years to maturity.These bonds will pay R45 interest every 6 months.Current market conditions are such that the bonds will be sold to net R937.79.What is the YTM of the issue as a broker would quote it to an investor?

• A) 11%
• B) 10%
• C) 9%
• D) 8%
• E) 7%

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Definitions:

Salvage Value

The projected value of an asset when it reaches the end of its functional lifespan.

Profit Comparisons

The process of analyzing changes in profit metrics over time or against industry benchmarks to gauge financial health or performance.

Economic Differences

The variations in economic conditions and outcomes among different regions, populations, or time periods, often studied to improve economic policies.

Salvage Value Proportions

Estimated residual value of an asset after its useful life, represented as a portion of its original cost.