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Interest Rates and the Cost of Debt

Interest and the Time Value of Money : Present and Future Values

1. If you borrow $4000 from an online lending company to buy a PC and agree to pay it in 48 equal installments at 0.9% interest per month on the unpaid balance, how much are your monthly payments? (ans= $102.99) And how much total interest will be paid. (ans= $943.52) 2. A business borrows $80,000 at 9.42% interest com

How much did each of them invest at different rates?

Jane invested some amount at the rate of 12% simple interest and some other amount at the rate of 10% simple interest. She recieves yearly interest of $130.00. Randy also invested in the same scheme, but he interchanged the amounts invested and recieved $4.00 more as interest. How much amount did each of the invest at different

Compound Interest and Time Value of Money

I just need to know how to take this equation A=P(1+r/365)^n and solve it for r this is what I came up with ((A/P)^1/n-1)365=r which though was right but when I plugged the numbers from the next part of the question the answers were not coming out right can you tell me if my equation for r is correct. Here is the question:

Finance - A firm needs to borrow $2,000,000 for the next year

A firm needs to borrow $2,000,000 for the next year to finance working capital. It¿s bank as proposed a combination of loan products as follows: 1) $750,000 from a line of credit at 12%; $600,000 at 9% collateralized by inventory; and 3) the remainder at 7% with a second mortgage on the factory building. If the firm accepts

Present and Future Values for Different Interest Rates

Use equations and a financial calculator to find the following values. See the hint for problems 2-1 a. An initial 500 compounded for 10years at 6 percent b. An initial 500 compounded for 10 years at 12 percent c. The present value of $500 due in 10 years at a 6 percent discount rate. d. The present value of $1,552.90 due

Derivatives and Risk Management- Swaps Suppose A issues floating-rate debt and B issues fixed-rate debt, after which they engage in the following swap: A will make a fixed 7.95% payment to B, and B will make a floating-rate payment equal to LIBOR to A. What are the resulting net payments of A and B?

Company A can issue floating-rate debt at LIBOR + 1%, and it can issue fixed rate debt at 9%. Company B can issue floating-rate debt at LIBOR + 1.5%, and it can issue fixed-rate debt at 9.4%. Suppose A issues floating-rate debt and B issues fixed-rate debt, after which they engage in the following swap: A will make a fixed 7.

Present Value and Inflation - example problem from my textbook

For this problem, I will give an example problem from my textbook with a solution for your review. I will then need you to develop one of your own examples illustrating the topic of present value. Your example should center around a hypothetical scenario that uses the same methods and formulas, but substitutes the situation and

Itemized deductions: which interest paid is deductible

8. Sharon sold her home on February 14th and purchased a new home one month later. The home cost $900,000 and was funded by obtaining an interest only mortgage from Chase for $900,000. She paid $9,000 of points to Chase to obtain this mortgage. On July 1st she refinanced the loan with Bank of America to obtain a lower interest r

Raising needed debt in single issue or 3 separate issues

Genvac Corporation is financing an ongoing construction project. The firm needs $8 million of new capital during each of the next three years. The firm has a choice of issuing new debt and equity each year as the funds are needed, or issuing the debt now and the equity later. The firm's capital structure is 40 percent debt and

Accounting Analysis and Interest Rates

See attached file for full problem description. 1. On January 1, 2007, a company issued $12 million face amount of 20-year, 14% stated rate bonds when market interest rates were 16%. The bonds pay interest semiannually each June 30 and December 31 and mature December 31, 2026. a. calculate the proceeds (issue price) of the c

Classification of Costs and Interest Capitalization: George Solti Corporation

On January 1, 2007, George Solti Corporation purchased for $600,000 a tract of land (site number 101) with a building. Solti paid a real estate broker's commission of $36,000, legal fees of $6,000, and title guarantee insurance of $18,000. The closing statement indicated that the land value was $500,000 and the building value

Annual versus semiannual interest payments

Gardner Co. issued bonds with a face value of $100,000 on January 1, 2007. The bonds had a 6 percent stated rate of interest and five year term. The bonds were issued at face value. A. What total amount of interest will Gardner pay in 2007 if bond interest is paid annually each December 31? B. What total amount of inte

Interest Rates Changes

Recently a customer asked you, "How do interest rate changes at the Federal Reserve impact me?" At a recent investor conference, one of the bank's stockholders asked, "What happens to the bank's profits as interest rates increase?" Thinking about both of these incidents, you begin to consider what message you want to communicate

Accrued interest and future values

A man is putting 6% of his income ($65,000) into a savings account at 6.6% interest. If his income is rising at 2% per year and he stays healthy for the next 35 years, how much would his account amount to after 35 years?

Effective Interest

Determine the approximate effective rate of interest for $300,000, 8%, five-year bonds issued at 95. (Assume straight-line amortization.)

Mortgage with Points: Effective Annual Interest Rate

Mortgage with Points. Home loans typically involve "points," which are fees charged by the lender. Each point charged means that the borrower must pay 1 percent of the loan amount as a fee. For example, if the loan is for $100,000, and two points are charged, the loan repayment schedule is calculated on a $100,000 loan, but th

Interest Rates

JB recently agreed to purchase new furniture from a local retail outlet under the following conditions. On the expectation that his income would rise in the near future, he purchased $27000 of furniture on credit. Under the terms of the agreement he would make no payment for the first year though interest would accrue. After the

Note Payable/Interest Receivable

Can you help me get started with this project? On June 1, 2006, Nott Corp. loaned Gore $600,000 on a 12% note, payable in five annual installments of $120,000 beginning January 2, 2007. In connection with this loan, Gore was required to deposit $6,000 in a noninterest-bearing escrow account. The amount held in escrow is to b

Financial Management

Assume that k* = 1.0%; the maturity risk premium is found as MRP = 0.2%(t - 1) where t = years to maturity; the default risk premium for AT&T bonds is found as DRP = 0.07%(t - 1); the liquidity premium is 0.50% for AT&T bonds but zero for Treasury bonds; and inflation is expected to be 7%, 6%, and 5% during the next three years

Loan Table Calculations

Loan Table Calculations. See attached file for full problem description. 1. Your loan $12,000 to your brother-in-law at 10% interest for six months. At the end of 6 months, you calculate how much he owes you and calculate the interest on that amount for the next six-month period. This continues for three years. Make a ta

Stated Interest Rate

If the stated rate of interest is 12% and it is compounded monthly, what is the effective annual interest rate?

Annual Interest Rate Compounded

Thorton will receive an inheritance of $500,000 three years from now. Thorton's discount rate is 10% interest rate compounded semiannually. Which of the following values is closest to the amount that Thorton should accept today for the right to his inheritance? $ 373,108. $ 375,657. $ 665,500.

Buying Assets

Should you buy an asset that will generate income of $1,200 at the end of each year for 8 years? The price of the asset is $6,200 and the annual interest rate is 10%.

Discuss the current state of the U.S., Brazil, Germany and Japan economies

Discuss the current state of the U.S. economy. Find the up-to-date information needed through google, etc. Focus on four key economic metrics: Gross Domestic Product (GDP), unemployment, inflation, and interest rates. In addition, discuss the state of the economy and political landscape for the largest economies in each of the t

Expansion consideration for Highland Cable Company

Highland Cable Company is considering an expansion of its facilities. Its current income statement is as follows: Highland Cable Company is currently financed with 50 percent debt and 50 percent equity (common stock, par value of $10). To expand the facilities, Mr. Highland estimates a need for $2 million in additional fin

Calculate Interest Rates

Calculate the interest rates for: a. PV=$250; FV=$307; t=3 years b. PV=$425; FV=$761; t=9 years c. PV=$25,000 FV=$136,771; t=15 years d. PV=$40,200; FV=$255,810; t=30 years

Financial Management

Need help in solving these four problems using financial calculator or clearly define steps in solving these problems. Please use financial calculator to solve problems. 1. Vito Carleone will loan you money on a "four-for-five" arrangement, i.e., for every $4 he gives you today, you give him $5 one week from now. What is