Write an Executive Summary of Analyzing the lending process of a financial institution (Bank/NBFI).

Q: 20. Arithmetic and Geometric Returns A stock has had returns of –26 percent, 12 percent, 34 percent,…

A: i) Arithmetic Mean  = Sum of all returns/N = (26 + 12 + 34 - 8 + 27 + 23)/6 = 19%

Q: 2. Two commercial banks offering investment proposal to Earlybird Merchandising as follows; Bank 1:…

A: We  will  use the below formula to determine the future value of the investment proposals, FV   =…

Q: 96.A large profitable corporation is considering a capital investment of $50,000. The equipment has…

A: Taxable income will be calculated by deducting the depreciation and expenses from annual gross…

Q: 3. On January 1, 2022, JPIA Company capitalized a new word processing software package that it had…

A: Expensing the fair market value or cost of the intangible asset over the period of its life is known…

Q: When can a check be a negotiable instrument

A: In finance in general and in the world of banking, trade and commerce in particular checks and…

Q: What is the final balance owing on the account in two years (24 months from now)?

A: Time value of money (TVM) is used to measure the value of money at different point of time in the…

Q: 11. Heinz Inc expects to generate earnings over the next five years of Php 50,000.00; Php 60,000.00;…

A: Value of the firm can be calculated by using capitalisation earning method. For this we need to use…

Q: You deposited P1,000 in a savings account that pays 8 percent interest, compounded quarterly,…

A: The future value is the amount that will be received at the end of a certain period. In simple…

Q: beneficiary of a life insurance policy is

A: Beneficiary of a life insurance policy is the person who receives money from the insurance company…

Q: The following Income Statement information has been obtained from the books of Unlimited Liquors…

A: Earning per share will be calculated by dividing earning available for common stockholders by number…

Q: QUESTION 8 Consider the following Taylor rule i=0.02+0.75y+0.25(x-2% ) Notice that the central bank…

A: The production approach measures bank output by treating banks as businesses that produce various…

Q: Complete the following table and compute the project’s conventional payback period. For full credit,…

A: Payback period is the period within which the sum invested by the company in a project will be…

Q: The present sum needed to provide for an annual withdrawal of $2,000 for 20 years beginning 5 years…

A: Annuity is a series of payments or withdrawals made at periodic intervals. The way this withdrawal…

Q: fund is to be set up for an annual scholarship of $5000. If the first payment is due in three years…

A: Solved using Financial Calculator  FV = 5000 N = 3 years * 4 = 12 I/Y = 6.2/4 = 1.55 CPT PV = -…

Q: A stock has had returns of 11 percent, -8 percent, 6 percent, 21 percent, 24 percent, and 16 percent…

A: The geometric return is calculated as compounded annualized return

Q: first question

A: Financial ratios refer to the magnitude of two values that should be taken from the firm’s…

Q: What is the present value or price of a 10 year $20,000 annuity with an interest rate of 5% $1.9M…

A: Present value of annuity can be calculated as: = Annuity * Present Value annuity factor (i%, n…

Q: On January 2, 2021, an Australian Copper Exploration Company was investigating the feasibility of…

A: Net Present Value (NPV) of a project is the sum of the present value of all cash inflows and…

Q: Catelyn makes deposits of $1438 at the beginning of every 6 months into an account earning 6.86%…

A: The future value after 2 years can be calculated with the help of future value of annuity due…

Q: (a) The finance charge is s The unearned interest calculated using the rule of 78 is S (Round the…

A: Finance charges refers to those costs or extra amount which is paid by the borrower to the lender on…

Q: The management of Charlton Corporation is considering the purchase of a new machine costing…

A: Cash payback period = Initial investment/Net cash flow per year

Q: A sum of ₱ 35,000 is invested from March 8,2019 to December 5,2019, at 18 ½ % Simple Interest. Find…

A: Following are the four methods to compute the Simple Interest: Ordinary Interest using Approximate…

Q: Water damage from a major flood in a Midwestern city resulted in damages estimated at $108 million.…

A: Insurance companies can be important for financial system stability because they are large investors…

Q: increases the unit variable cost by $18 per unit but it does not have any fixed costs. The company…

A: Operating income = total revenue - total variable costs - total fixed costs. We will now use the…

Q: Discuss the Beta of  as measure of systematic risk.

A: In finance systematic risk refers to that risk which is inherent to the entire market. As the risk…

Q: How are the unendorsed HO-3 and the HO-5 similar? А. Both are designed to cover condominiums. В.…

A: HO-3 and HO-5 Homeowner insurance policy are insurance policies which gives coverage to a flat or…

Q: You have just started up a new company in NS that produces software for the waste management…

A: Depreciation Capital cost allowance (CCA) CCA has a set of rates based on which the annual…

Q: Derry Corporation is expected to have an EBIT of $3,400,000 next year. Increases in depreciation,…

A: Given,  EBIT of Derry Corporation=$3,400,000 next year. Capital spending = $160,000, $155,000, and…

Q: Bilbo Baggins has just purchased a home and taken out a $400,000 mortgage. The mortgage has a…

A: The monthly payment amount can be calculated with the help of present value of annuity function

Q: i. The net present value ii. The internal rate of return commend the decision to be made

A: Since in the given case the IRR is higher in machine 1 so it is to be selected.   Assumptions: We…

Q: A savings bond with a face value of 1000 bears interest at 7% payable semi-annually and matures on…

A: Bond Sell at premium or at discount If bond price is  trading at a value that  higher than face…

Q: the market value of A

A: In this case of borrowing we buy cap from market at swap rate, if market interest rate is increased…

Q: Prepare an amortization schedule for the first 3 payments (in $) of a $62,000 mortgage at 5% for 30…

A: Amortization of a loan refers to the gradual repayment of the loan over a period of time. The…

Q: A debt of ​$40,000 is repaid over 12 years with payments occurring annually. Interest is 4%…

A: Effective annual interest rate If the interest rate has compounding other than annually, the…

Q: 3. Which of the following statements is most correct?    a. Trade credit is provided to a business…

A: A creditor is a legal entity (individual or institution) that gives credit by giving another legal…

Q: Cash flows estimation and capital budgeting: You are the head of finance department in XYZ Company.…

A: The present value method is a method of finding the profitability of a project by discounting its…

Q: You have a loan outstanding. It requires making 8 annual payments at the end of the next 8 years of…

A: Present value is defined as the sum of the funds, which are used to get invested for achieving the…

Q: To finance the development of a new product, a company borrowed $29000 at 4% compounded monthly. If…

A: Solution:- When a loan is taken, it is to be repaid in lump sum or in installments. If it is paid in…

Q: A large profitable corporation is considering a capital investment of $50,000. The equipment has a…

A: Taxable income for the year 2 can be calculated by using this equation Taxable income for the year 2…

Q: important to manage transaction exposure

A: The RISK - posed by firms participating in international commerce that currency exchange rates will…

Q: Assuming no withdrawals or additional payments were made, how much money will be in your retirement…

A: Here we will apply the concept of time value of money. The concept says that value or worth of money…

Q: BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it…

A: Net present value = present value of future cash inflows - initial investment

Q: Given the information below for Seger Corporation, compute the expected share price at the end of…

A: EPS (earning per share) EPS is a measure of a company's profitability that shows how much money it…

Q: An unlevered firm has a cost of capital of 11.3 percent and a tax rate of 34 percent. The firm is…

A: We need to calculate weighted average cost of capital(WACC) which will be the firm's levered cost of…

Q: What’s the difference between order and volume discounts? Justify your answer.

A: Manufacturers and sellers utilize volume discount pricing, or volume discounting, to reward…

Q: 7. A company has just paid a dividend of 5$ per share. Dividends are expected to grow as follows:…

A: Dividend paid now is $5 Risk free rate is 5% Equity risk premium is 8% Beta is 1.15 Growth rate is…

Q: Following is information for two stocks:   Investment    r        σ   Stock X        8%     10%…

A: Relative risk can be judged by comparing the coefficient of variation (CV) of both the securities.…

Q: Assuming that the mandate to a portfolio manager was to invest in a broadly diversified portfolio of…

A: A portfolio manager is a professional who makes investment decisions and executes investing…

Q: A debt of $6434is to be settled by two equal payments due in 1 month and 7 months respectively.…

A: Let equal payments be X: X*PVF(6%/12,1) + X*PVF(6%/12,7) = Total debt Hence, the Equal payments can…

Q: Use the following table for this questio Present value of an Annuity of $1   Periods…

A: Net present value(NPV) is the difference between present value of all cash inflows and initial…

Loanable Funds Theory

The loanable funds theory is a neoclassical theory that determines the interest rate where the demand for loanable investments and supply of loanable funds intersect. To determine the interest rate, this theory employs linear regression and a demand curve. At the equilibrium point, demand for borrowings and demand for the issuance of borrowing funds are inextricably linked. This point of equilibrium should equalize demand and the supply of money available for borrowing.