The lockdown of 2020 has turned many people into alcoholics. You decide to place an order for Boll & Cie champagne for distribution and for consumption (mostly for consumption). You finance this with a curocurrency oan for EUR 131.3. This is a 1 year loan. You choose Deutsche Bank (DB) as the syndicate lead because they will probably be bankrupt soon and you might skirt your debts. DB charges a syndication fee of 0.8%. The interest ate is set as LIBOR + 1.65. The initial LIBOR rate is 5.5. Interest is payble semi-annually. What is the effective annual cost for the first six months? O a. 0.07150 O b. 0.07208 O c.0.03575 O d. 0.05500 O e. 0.05544 O f Not enough information O g. 0.03604

The lockdown of 2020 has turned many people into alcoholics. You decide to place an order for Boll & Cie champagne for distribution and for consumption (mostly for consumption). You finance this with a curocurrency oan for EUR 131.3. This is a 1 year loan. You choose Deutsche Bank (DB) as the syndicate lead because they will probably be bankrupt soon and you might skirt your debts. DB charges a syndication fee of 0.8%. The interest ate is set as LIBOR + 1.65. The initial LIBOR rate is 5.5. Interest is payble semi-annually. What is the effective annual cost for the first six months? O a. 0.07150 O b. 0.07208 O c.0.03575 O d. 0.05500 O e. 0.05544 O f Not enough information O g. 0.03604

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Suppose you are in the market for a new car worth $18,000. You are offered a deal fo make a S1,800 down payment now and to pay the balance in equal end-of-month payments of $421.85 over a 48-month period. Consider the following situations:a.Instead of going through the dealer's financing, you want to make a down payment of $1,800 and take out an auto loan from a bank at 11.75% compounded monthly. What would be your monthly payment to pay off the loan in four years?b. If you were to accept the dealers offer, what would be the effective rate of interest per month charged by the dealer on your financing?
A supplier will give Shark Unibase Company a discount of 2% if an invoice is paid 60 days before its due date. Suppose Shark wants to take advantage of this discount but needs to borrow the money. It plans to pay back the loan in 60 days. What is the highest annual simple interest rate at which Shark Unibase can borrow the money and still save by paying the invoice 60 days before its due date?
1) Suppose Taylor's guitars is considering whether it wants to pay its distributor early to receive a cash discount. Its terms are 2/10 net 50. Because Taylor's doesn't have the funds to cover that expense now, it would have to take out a short-term bank loan with an effective rate of 15%. Should it take the cash discount?
The Patel Company has several financial issues to solve. As the company’s Financial Analyst you have been asked to answer the following 2 questions: Their bank will lend them $100,000 for 90 days at a cost of $1,200 interest. What is the company’s effective annual rate? A major supplier has granted credit terms of 1/10 N120. Assuming the company can borrow any amount of money at the rate you have calculated above (in part 1), should the company take the discount? (Your answer must be supported with a calculation of the cost of not taking the discount – using either simple or effective annual rate)
You have just purchased new goods worth 100,000 EUR from your supplier. Your supplier offers you to pay within 35 days. If you pay within the first 8 days, you get a discount of 1.2%. When would you pay? Why? What is the effective interest rate? Under which circumstances would you take the trade credit?
Suppose you are in the market for a new car worth $18,000. You are offered a deal to make a $1,800 down payment now and to pay the balance in equal end-of-month payments of $421.85 over a 48-month period. Consider the following situations:(a) Instead of going through the dealer's financing, you want to make a down payment of $1,800 and take out an auto loan from a bank at 11.75% compounded monthly. What would be your monthly payment to pay off the loan in four years?(b) If you were to accept the dealer's offer, what would be the effective rate of interest per month charged by the dealer on your financing?
You have decided to buy a car with price tag of $30,000 but you are able to negotiate the price down to $28,000. You have $1,000 saved, so you need to borrow $27,000 in a 5-year loan from your bank (your bank offers lower rates than the auto-dealer) at a 3% APR (annual rate). How much will you owe to the bank after 2 years?
National Co. needs to borrow P300,000 for the next 6 months. The company has a line of credit with a bank that allows the company to borrow funds with a 10% interest rate subject to a 20% of loan compensating balance. Currently, National Co. has no funds on deposit with the bank and will need the loan to cover the compensating balance as well as their other financing needs. How much will National Co. need to borrow?
You are considering purchasing a car with a sticker price of $50,000 (nonnegotiable with no down payment required). You wish to make monthly payments for five years and the most you can afford to pay is $1,200 a month. The credit union has agreed to loan you the money at a 7% annual interest rate. Create an amoritization table for the amount the bank wants you to pay and another table for the amount we can actually afford of $1,200.
You buy a $560,000 house and pay $160,000 down. (If you need to resort to theft to get your$160,000, please don’t steal from the same bank where get your loan. Banks tend to frown on suchpractices.) The loan is for 30 years and is at 4% monthly. a) Find the monthly payment.b) What is the final payment? TVM SOLVER
You do not have enough money to start your business so you approach a bank. The bank offers to lend you Rs 100,000 and you sign a security paper. The bank asks you to issue a security paper in their favor on the following terms required by the bank. Par Value = Rs 100,000 (ie. Loan Principal Amount) Maturity = 2 years Coupon Rate = 15% mark-up paid at end of each year Require rate of return = 10% pa Note: This is a simplified case where we are creating a short-term bank loan like a Bond. For the Bank, what is the Value of Investing in security with you?
FINCORP has two debtors who each make a $10, 000 purchase. Debtor 1 pays their account in 10 days, while debtor 2 pays in 30 days. a) In simple terms, what nominal annual interest rate is debtor 2 incurring for the benefit of delaying payment? Note: base your answer on the following logic. If a borrower pays 3% for a 30-day loan, we could express the nominal annual rate as roughly 36.5% i.e 3% x 365/30 = 36.5% that payment is due within 30 days but debtors will receive a 5 percent discount if they pay within 14 days. I'm quite unsure if that 5% as it is a discount, is handy or the steps to calculate the nominal interest rate

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