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Interest Rates and the Cost of Debt

Need transaction worksheet to balance with given debits and credits

I have completed the transaction worksheet but cannot get it to balance!! The credits and debits are given. I can't figure out if i'm not substracting something or is something is in the wrong column(?)-If I can't complete the transaction workwheet correctly, then the whole assignment with common-size percentages and other calcu

Georgia Electric: Compute ROI given a scenario of information

See attached file for full problem description. --- ROE Georgia Electric reported the following income statement and balance sheet for the previous year: Balance sheet: Assets Liabilities & Equity Cash $ 100,000 Inventory 1,000,000 Accounts receivable 500,000 Current assets $1,600,000 Total debt $4,000,000

Interest Rates

Select two banks in your area that offer debit cards on their checking accounts. Find the current interest rates and calculate the annual interest you would receive from each of these accounts on a deposit of $5000. If you cannot find checking accounts that offer interest on even that high of a deposit, then find out what inter

Interest Rate

Most correct true statement 1. All else =, an increase in interest rates will have a greater effect on the prices of long term bonds than it will on the prices of short term bonds 2. All else =, an increase in interest rates will have a greater effect on higher coupon bonds 3 An increase in interest rates will have a

Future Value

40. If it were evaluated with an interest rate of 0%, a 10 year regular annunity would have a present value of $3755.50. If the future (compounded) value of this annuity, evaluated a year 10, is $5,440.22, what effective annual interest rate must the analyst be using to find the future value 1. 7% 2. 8% 3. 9% 4. 10% 5. 1

Debt Financing

19. The fact that a percentage of the interest income received by one corporation is excluded from taxable income has encouraged firms to use more debt financing relative to equity financing. True/False?

Interest Rates

16. An investor with a six year investment horizon believes that interest rates are determined only by expectations about future interest rates. This investor should expect to earn the same rate of return over the 6 year time horizon if the investor buy a 6 year or a 3 year bond now and another 3 year bond three years from now.

Sauer Food, Vroom: Calculate effective rate of interest and total interest cost

Question #1 Sauer Food Company has decided to buy a new computer system with an expected life of three years. The cost is $150,000. The company can borrow $150,000 for three years at 10 percent annual interest or for one year at 8 percent annual interest. How much would Sauer Food Company save in interest over the three-

Break-even, fixed v variable costs, degree of leverage, EPS

Please use attached format to answer questions. 1. Shock Electronics sells portable heaters for $25 per unit, and the variable cost to produce them is $17. Mr. Amps estimates that the fixed costs are $96,000. a. Compute the break-even point in units. b. Fill in the table below (in dollars) to illustrate that the break-e

Loan problem

On 10/1/05, Astros Co lends $350,000 to the company batting practice pitcher at an annual interst rate of 7.2%. This act of graciousness will allow the batting practice pitcher to purchase a new spring training condominium. Terms of the loan require the batting practice pitcher to repay Astros Co with two hundred (200) equal m

Word problem with interest rates

An environmental testing company needs to purchase $40,000 worth of equipment 2 years from now. At an interest rate of 20% per year, compounded quarterly, the present worth of the equipment is closest to? A. $27,070 B. $27,800 C. $26,450 D. $28,220

Compounded interest rates


Compound interest: calculate amount where maximum interest savings occur

Solve this problem: With a loan amount of $174,154 and an APR of 8.275% and a term of 28 yrs (paid monthly): 1) Calculate the amount of interest paid. 2) Calculate the amount of interest saved by making extra payments in increments of $50 (from $50 - $1000) 3) MAIN QUESTION: calculate the amount where the maximum i

Compound Interest

The formula for the amount due on a loan is A= P (1+(r/m))^(mt) Now in the question the time in years (t) is 6 years 9 months. P= $17500 r=0.085 How do I write the time(t) in the equation? Also, what if the time was 4 years 3 months, how would I write that for the time in years (t)? Also, what does semiannually, mon

Compound Interest

The question is: Find the amount due on each compound interest loan. $7500 at 6.5% for 8 years 6 months if the interest is compounded: a. Annually b. Quarterly c. Weekly I know the formula is A=P(1+(r/m))^(mt) but my question is, how do i write the ''8 years 6 months'' as my time (t)?

Interest Rates

(See attached file for full problem description) --- Calculating Interest Rates (Example) How do you determine the annual interest rate? Present Values Future Values Time Period _____________________________________________________ 100 115.76 3

Future Values and Compound Interest

Can you please take me through this example process step by step? Future Values In 1880 five aboriginal trackers were each promised the equivalent of 100 Australian dollars for helping to capture the notorious outlaw Ned Kelley. In 1993 the granddaughters of two of the trackers claimed that this reward had not been paid.

Interest: Quinn Electric Company

Quinn Electric Company has outstanding a bond issue that will mature to its $1,000 par value in 12 years. The bond has a coupon rate of 15% and pays the interest annually. a) Find the value of the bond if the required return is (1) 10 percent, (2) 15 percent and (3) 17 percent. b) Use your findings in part a) to discuss the

Break-even level for EBIT and computing earnings per share

Cain Auto Supplies and Able Auto Parts are competitors in the aftermarket for auto supplies. The separate capital structures for Cain and Able are presented in the attached file. a) Compute earnings per share if earnings before interest and taxes are $10,000, $15,000, and $50,000 (assume a 30 percent tax rate). b) Explain the

Please review my answers

My instructor posted a message in our classroom that said to show our work on our final and she would give us partial credit if we missed the answer to a problem but used the correct method. The attached spreadsheet shows the answers that I turned in and listed below are the correct answers that she gave. I didn't receive partia

Fixed Interest

If you invest $100 at the end of each month in a fixed interest mutual fund paying annual interest of 6% compounded monthly what will your investment be worth after 10 years?

Spot acrate based on covered interest parity

The spot exchange rate between the U.S. dollar and the German mark is $.5500/DM. The dollar deposit rate is 8 percent and the DM deposit rate is 4 percent. a. What is covered interest parity? What is the six-month forward rate if covered interest parity holds? b. What is the unbiased forward rate hypothesis? If the unbias

Use of financial futures to hedge interest rate exposure.

The Treasurer for Pittsburgh Iron Works wishes to use financial futures to hedge her interest rate exposure. She will sell five treasury futures contracts at $107,000 per contract. It is July and the contracts must be closed out in December of this year. Long-term interest rates are currently 7.3 percent. If they increase to

Word Problem

Need to really see how the formula is calculated on this word problem. Compute earnings per share if earnings before interest and taxes are $10,000, $15,000 and $50,000 (assume a 30%tax rate). Explain the relationship between earnings per share and the level of EBIT. If the cost of debt went up to

Monthly payment calculation

Problem: On Dec 31, a house is purchased with the buyer taking out a 30-year $90,000 mortgage at 9% interest compounded monthly. The mortgage payments are made at the end of each month. Calculate the amount of the monthly payment. a. $724.16 b. $1356.37 c. $1365.69 d. $1355.91 e. None of the above


Problem: Bill needs $8000 to buy a new car in five years. How much should be deposited at the end of every quarter into an account that earns 8% interest compounded quarterly? a. $329.25 b. $345.97 c. $666.33 d. $ 489.25 e. None of the above

Valuation of firm

Introduction: Company X currently has no debt.The Market Value of its 15 million outstanding shares is 25 Euros.The newly hired Financial manager is convinced that this Zero Debt capital structure is not optimal; Debt financing increases the global market value of the company's securities by the present value of the corporate