On January 1, 2005, Company X sold land that originally cost $400,000 to Company B. As payment, Company B gave Company X $600,000 note. The note bears an interest rate of 4% and is to be paid in three annual installments of $200,000 (plus interest on the outstanding balance). The first payment is due on December 31, 2005. The ma
Mark Grace, Inc. has completed the purchase of new IBM computers. the fair market value of the equipment is $824,150. the purchase agreement specifies an immediate down payment of $200,000 and semi-annual payments of $76,952 beginning at the end of 6 months for 5 years. What is the interest rate to the nearest percent used in di
Using a Microsoft Word document (please include the work for the steps as detailed below). 1. Go to the Federal Reserve Bank of St. Louis's (http://www.stls.frb.org/) to access historical U.S. interest rate data, click on FRED, and then on "Interest Rates". a.) Get monthly data, from January 1955 to February 2002, on
The following payment plans are offered on the purchase of a new refrigerator. Plan A $375 cash Plan B 8 monthly payments of $55 Plan C $100 cash down and 6 monthly payments of $50. Which plan is the best if interest is 24% annually, compounded monthly for the buyer? And for the seller?
Figuring out the best plan to structure the rent payment for a new office building... Alternatives are: Plan A Annual payment of $15,000 at the end of each year. Plan B Monthly payments of $1,200 at the end of each month. Assuming an interest rate of 12% compounded monthly, which payment plan is better?
Investigate the data available from the Federal Reserve Board's http://www.federalreserve.gov/releases Using a Microsoft Word document, please answer the following questions: 1. What is the difference in the interest rates on commercial paper for financial firms versus non-financial firms? 2. What was the interest rate o
3.) In computing the cost of capital, do we use the historical costs of existing debt and equity or the current costs as determined in the market? Why? 4.) Why is the cost of debt less than the cost of preferred stock if both securities are priced to yield 10 percent in the market? 8.) Why is the cost of issuing new comm
Ed Delahanty purchased 500 shares of Niagara Corporation stock on margin at the beginning of the year for $30 per share. The initial margin requirement was 55%. Ed paid 13% interest on the margin loan and never faced a margin call. Niagara paid dividends of $1 per share during the year. At the end of the year, if Ed sold the
A company borrows $75,000 which is to be repaid with equal payments semiannually for 10 years. The interest rate is 10%. Find the semiannual payments. A. $3,750.00 B. $6,018.19 C. $4,125.00 D. $5,834.22
How much should be invested at 8% compounded semiannually in order to have $5000 at the end of 8 years? A. $4215.27 B. $9364.91 C. $2669.54 D. $3048.78
Find the interest rate for a simple interest loan with P=$1420, I=$306.72, t =3 years A. 7.2% B. 1.54% C. 6.5% D. 9%
You enter into a forward contract to buy a 10 year, zero-coupon bond that will be issued in one year. The face value of the bond is $1000, and the 1-year spot interest rates are 4 percent per annum at 9 percent per annum, respectively. Both of these interest rates are expressed as effective annual yields (EAYs). a. What is
Assume that the current interest rate on a 1-year bond is 8 percent, the current rate on a 2-year bond is 10 percent, and the current rate on a 3-year bond is 12 percent. If the expectations theory of the term structure is correct, what is the 1-year interest rate expected during Year 3?
1. The real risk-free rate of interest is 3 percent. Inflation is expected to be 4 percent this coming year, jump to 5 percent next year, and increase to 6 percent the year after (Year 3). According to the expectations theory, what should be the interest rate on 3-year, risk-free securities today?
I am considering a 1 yr bond that has a current interest rate of 8 percent, the current rate on a 2-year bond is 10 percent, and the current rate on a 3-year bond is 12 percent. If the expectations theory of the term structure is correct, showing the computation what is the 1-year interest rate expected during Year 3?
The real risk-free rate of interest is 3 percent. Inflation is expected to be 4 percent this coming year, jump to 5 percent next year, and increase to 6 percent the year after (Year 3). According to the expectations theory and showing the computations, what should be the interest rate on 3-year, risk-free securities today?
Please see the attached file. --- Shady Lady sells window coverings to both commercial and residential customers. The following information relates to its budgeted operations for the current year. Commercial Residential Revenues $300,000 $480,000 Direct material costs $ 30,000
1. A firm needs $1 million in additional funds. These can be borrowed from a commercial bank with a loan at 6 percent for one year or from an insurance company at 9 percent for five years. The tax rate is 30 percent. A. What will be the firm's earnings under each alternative if earnings before interest and taxes (EBIT) are $
J. Ross and Sons Inc. has a target capital structure that calls for 40 percent debt, 10 percent preferred stock, and 50 percent common equity. The firm's current before?tax cost of debt is 10 percent, and it can sell as much debt as it wishes at this rate. The firm tax rate is 40 percent. The firm's preferred stock currently s
Please figure the following problem so I can understand how to figure interest: Your company plans to borrow $5 million for 12 months, and your banker gives you a stated rate of 14 percent interest. You would like to know the effective rate of interest for the following types of loans. (Each of the following parts stands alon
Corporation is evaluating the following four independent, investment opportunities: Project A, Cost $300,000, Rate of return 14% Project B, Cost $150,000, Rate of return 10% Project C, Cost $200,000, Rate of return 13% Project D, Cost $400,000, Rate of return 11% Jackson's target capital structure is 60 percent debt and 4
I am working on corporate finance and figuring out interest rates. The problem has some of the givens, I need to find the value of the unidentified given. Other examples: 15% = R + [1.25 x (14% - R )] 16% = 9% + [1.10 x (k - 9%)] 15% = 10% + [b x (12.5% - 10%)]
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
Two bonds have the following criteria: a. b. 6% coupon 13% coupon 11 yrs to maturity 11 years to maturity semi annual payments semi annual payments YTM 9.5% YTM 9.5% 1) If interest rates rise by 1%
Capone Child Care Centers, Inc., plans to borrow $250,000 for one year at 10 percent from the Chicago Bank and Trust Company. There is a 20 percent compensating balance requirement. Capone keeps minimum transaction balances of $18,000 in the normal course of business. This idle cash counts toward meeting the compensating balanc
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
10. Little Monsters, Inc., borrowed $1,000,000 for two years from NorthernBank, Inc., at an 11.5% interest rate. The current risk-free rate is 2%, and Little Monsters' financial condition warrants a default risk premium of 3% and a liquidity risk premium of 2%. The maturity risk premium for a two-year loan is 1%, and inflation i
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
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
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