29.1. A company caps a 3-month floating rate at 2% per annum. The principal amount is $20 million. On a reset date, the floating rate is 4% per annum. What payment would this lead to under the cap? When would the payment be made?
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- 7. A company borrows US dollars at 5.1% for 183 days and then at maturity refinances the principal and interest at 5.3% for a further 92 days. What is the simple cost of borrowing over the 9 months?19. Rublin Company applies for a one-year, P1 million loan from RY Bank. The term of the loan requires 12% per annum interest, compounded semi-monthly and will be paid together with the principal at the end of the year. How much total interest will be paid at the end of the year?11. On January 1, 2011, Camry Company received a two-year P500,000 loan. The loan calls for interest payments to be made at the end of each year based on the prevailıng market rate at January 1 of each year. The interest rate at January 1, 2011 was 10%. Fortuner Company also has a two-year P500,000 loan but Fortuner's loan carries a fixed interest rate of 10%. Camry Company does not want to bear the risk that interest rates may increase in the second year of the loan. Fortuner Company believes that rates may decrease and it would prefer to have variable debt. So the two entities enter into an interest rate swap agreement whereby Fortuner agrees to make Camry's interest payment in 2012 and Camry likewise agrees to make Fortuner's interest payment in 2012. The two entities agree to make settlement payments, for the difference only, on December 31, 2012. If the interest rate on January 1, 2012 is 8%, what will be Camry's settlement with Fortuner? Using the information in MC 11, what…
- 11. On January 1, 2011, Camry Company received a two-year P500,000 loan. The loan calls for interest payments to be made at the end of each year based on the prevailıng market rate at January 1 of each year. The interest rate at January 1, 2011 was 10%. Fortuner Company also has a two-year P500,000 loan but Fortuner's loan carries a fixed interest rate of 10%. Camry Company does not want to bear the risk that interest rates may increase in the second year of the loan. Fortuner Company believes that rates may decrease and it would prefer to have variable debt. So the two entities enter into an interest rate swap agreement whereby Fortuner agrees to make Camry's interest payment in 2012 and Camry likewise agrees to make Fortuner's interest payment in 2012. The two entities agree to make settlement payments, for the difference only, on December 31, 2012. If the interest rate on January 1, 2012 is 8%, what will be Camry's settlement with Fortuner? a. 10,000 payment b.…A. DEF has total forecasted gross purchases of P4,500,000 relating to a major supplier for the coming year. The supplier is offering a credit term of 3/15, n/45. How much is the simple annual effective cost of paying on the 45th day? B. ABC can take a 45-day loan with a 15% interest deducted in advance, to be reapplied each time. How much is the simple annual cost of the loan? C. ABC’s bank offered a loan with conditions of a P5,000,000 face amount, 6-month term, 4% interest deducted in advance and bank charge of P30,000. How much is the compounded annual effective cost of the bank loan?A firm is offered trade credit terms of 3/15, net 30 days. The firm does not take the discount, and it pays after 50 days. (Assume a 365-day year.) A. The number of compounding period is ___. B. How much is the rate per period? C. How many days are there per period? D. What is the annual nominal rate of not taking this discount?
- Suppose that a company enters into a FRA that is designed to ensure it will receive a fixed rate of 4.8% on a principal of $100,000,000 for a six-month period beginning in 4 years. If, in 4 years the six-month LIBOR is 5.2% for the ensuing six-month period, what is the value of the FRA at that point in time (i.e. in 4 years)? (Required precision: 0.01 +/- 0.01) (All interest rates in this problem are annual rates, compounded semi-annually)A firm is offered trade credit terms of 3/15, net 30 days. The firm does not take the discount, and it pays after 50 days. (Assume a 365-day year) a. What is the effective annual cost of not taking this discount? b. How many days are there per period? c. How much is the rate per period? d. The number of compounding period is_? e. What is the annual nominal rate of not taking this discount?A P28,000 debt at 15% interest compounded semi-annually is to be amortized at P2,250 every 6 months. A final smaller payment is to be made after the last regular payment. How many regular payments are needed? When will the final smaller payment be due? How much is the final payment?
- A firm is offered trade credit terms of 3/15, net 30 days. The firm does not take the discount, and it pays after 50 days. (Assume a 365-day year.) How much is the rate per period? The number of compounding period is ___ How many days are there per periodSuppose $10,000 is deposited into an account that earns 10% per year for 5 years. At that point in time, uniform end-of-year withdrawals are made such that the account is emptied after the 15 th withdrawal. The size of these annual withdrawals is closest to what value? (a) $2118 (b) $2621 (c) $3410 (d) $16,105A firm is offered trade credit terms of 3/15, net 30 days. The firm does not take the discount, and it pays after 50 days. (Assume a 365-day year.) Questions: - What is the annual nominal rate of not taking this discount? - How much is the rate per period?
