Effective annual rate of warehousing arrangement

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1. A 6 percent coupon bond is priced at $1,150. Coupons are paid semiannually. The bond has a $1,000 face value and a yield to maturity of 4.2 percent. How many years will it be until this bond matures?

2. The Michelle Ng. & Sara K. (M&S) Retail is considering using a public warehouse loan as part of its short-term financing. The firm will require a loan of C$1,560,000. Interests on the loan will be 15% (APR, annually compounding) to be paid at the end of the year. The warehouse charges 1% of the face value of the loan, payable at the beginning of the year. What is the effective annual rate of this warehousing arrangement? (Show Calculations & Cash Flow on a timeline)

Reference no: EM132006528

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