Share
Explore BrainMass

Interest Rates and the Cost of Debt

Calculations

1. Calculating the Number of Periods - You're trying to save to buy a new $170,000 Ferrari. You have $40,000 today that can be invested at your bank. The bank pays 5.3 percent annual interest on its accounts. (a) How long will it be before you have enough to buy the car? (b) If you believe your mutual

Present Value of $10,000 with Varying Interest Rates

What is the present value of $10,000 received a. 12 years from today when the interest rate is 4% per year? b. 20 years from today when the interest rate is 8% per year? c. 6 years from today when the interest rate is 2% per year?

Stock Market Evaluation

Can you help me get started with this assignment? Briefly summarize and explain why the stock market and the interest rates might have moved in that manner on that particular date. Please see attached file(s) for complete details!

Money and Interest Rate

A borrower's guide to forecasting interest rate by Tom Woodruff 1. What major economic indicators would you examine if you were planning to make a large purchase and needed a loan. Buying a new car, business equipment or a house? 2. Describe how the federal reserve's policy makers can influence interest rates? 3. Do

Charitable Contributions/Debt: St. Jude and Universal Health Services

See attached file. Case Study - Prepare a response to each questions from the case study, "Case 3, Charitable Contributions and Debt: A Comparison of St. Jude Children's Research Hospital/ALSAC and Universal Health Services" from Chapter 5 of the text, Mastery of the Financial Accounting Research System (FARS) through Cases,

Kanton Case

Please provide answers to these questions. The PDF attqached contains the information for question 3. Please do your best to answer the questions with the information provided. 1. Caron's Canoes is considering relaxing its credit standards to encourage more sales. As a result, sales are expected to increase 15 percent from

Interest, Annuities, and Amortization.

Please provide the formulas and 2 solved examples using the formulas for each of these topics: Simple interest Compound interest Future value of an annuity Present value of an annuity Amortization

Ordinary annuities

If not explicitly stated always assume payments are made at the end of the period. 1.The Derr-McGee Manufacturing Company plans to build a new $50,000 warehouse seven years from now. They plan to accumulate the $50,000 in an account before beginning construction. If money is worth 7% compounded annually, how much must each ye

Financial Management

Your firm is considering the following three alternative bank loans for $1,000,000: a) 10% loan paid at year end with no compensating balance b) 9% loan paid at year end with a 20% compensating balance c) 6% loan that is discounted with a 20% compensating balance requirement Assume that you would normally no

Calculating Bad Debt Expense

On January 1, 2003, a company's accounts receivable balance was $8,900 and the allowance for doubtful debts was $600. This information came from the December, 31 2002 balance sheet. During 2003, The company reported $77,000 of credit sales. During 2003, $400 worth of receivables were written off as uncollectible. Cash collection

Miami National Bank: Compensating balances vs loan interest rate.

Tom Sander is a loan officer with Miami National Bank. The bank typically charges 8% APR on loans with a compensating balance requirement of 10%. In order to be competitive with other banks, Sanders will adjust the loan rate based on a customer's compensating balance level. A customer maintaining a balance greater than 10% will

Calculating EAR, APR, Effective Interest Rate, Retirement Saving

1) Your savings account offers monthly compounding. If your money doubles in 5 years what is the EAR and APR on the account? 2) The Jet Co. has an $80,000 line of credit with a 12% interest rate and a 10% compensating balance requirement which is based on the total amount borrowed. What is the effective annual interest rate i

Interest Rates & Capital Markets

Please help with the following finance problems. Provide brief answers for each. a. Assume that interest rates have increased substantially. Would this tend to increase or decrease the market value of a firm's liabilities (relative to the book value of liabilities)? b. Suppose you are a manager in a manufacturing busines

Yield Curve

6-1 The following yields on U. S. Treasury securities were taken from a recent financial publication: Term Rate 6 months 5.1% 1 year 5.5 2 years 5.6 3 years 5.7 4 years 5.8 5 years 6.0 10 years 6.1 20 years 6.5 30 years 6.3 a. Plot a yield curve based on these data. b. What type of yi

Short-term interest-bearing debt

Please read this statement and answer the practice questions. Smaller companies treat short-term interest-bearing debt as long-term debt and they also include it in the capital structure to estimate the overall cost of capital of the company." 1.why do you think small companies treat short term debt this way? 2. Do you th

Integrated Case 6-21: Morton Handley & Company, Interest rate determination

Integrated Case 6-21: Morton Handley & Company Interest rate determination. Maria Juarez is a professional tennis player, and your firm managers her money. She has asked you to give her information about what determines the level of various interest rates. Your boss has prepared some questions for you to consider. a. Wh

Refinancing of short-term debt

Medvedev Inc., issued $10,000,000 of short-term commercial paper during the year 2006 to finance construction of a plant. At December 31, 2006, the corporation's year-end, Medvedev intends to refinance the commercial paper by issuing long-term debt. However, because the corporation temporarily has excess cash, in January 2007

Money and Banking MC Questions

When the Fed tightens monetary policy during business expansions, the ________ loanable funds shifts to the ______. A) demand for, right B) demand for, left C) supply of, left D) supply of, right Interest rates have fallen since the early 1980s because the A) federal deficit has declined B) federal deficit has in

Millenium

The New Millenium Manufacturing Company produces two products. One is a millenium surf kit. The other product is a professional surf-board (short board) used in world class surfing competition. Most of the sales come from the millenium surf product, but recently sales of professional boards have been increasing. The following in

Optimal financing and investment strategy for your scenario

I need help on this assignment. I have to answers the following questions based on a chosen scenario. The selected scenario is: A manufacturing organization considering expansion to India or Brazil Prepare a proposal in which you select the optimal financing and investment strategy for your scenario. The selected scenar

Financial Assets and Interest Rates

Which of the following financial assets would be most susceptible (vulnerable) to a decline in value if interest rates increased? a. a short term fixed income financial asset (ex. short term bond) b. a long term fixed income financial asset (ex. long term bond) c. a long term variable interest rate income financial asset

Markets

7 As bond market interest rates increase, the value (i.e., price) of a fixed coupon interest rate bond (i.e., a typical corporate bond) a. does not change b. increases c. decreases d. insufficient information to answer this question e. None of the above or insufficient information 8 In an efficient capital market a