Explore BrainMass
Share

# Banking

### Notes are given on the required reserve ratio.

Assume the public in Nealland does not hold any cash. All commercial banks, however, hold 5% of their checking deposits as excess reserves, regardless of the interest rate. Consider the balance sheet of one of several identical banks: ASSETS LIABILITIES & NET WORTH Reserves \$

### Managerial Economics Assume the Reynolds's tax rate is 40 percent and the equipment's depreciation would be \$100 per year. If the company leased the asset on a 2-year lease, the payment would be \$110 at the beginning of each year. If Reynolds borrowed and bought, the bank charge 10 percent interest on the loan. In either case, the equipment is worth nothing after 2 years and will be discarded. Should Reynolds lease or buy the equipment?

Assume the Reynolds's tax rate is 40 percent and the equipment's depreciation would be \$100 per year. If the company leased the asset on a 2-year lease, the payment would be \$110 at the beginning of each year. If Reynolds borrowed and bought, the bank charge 10 percent interest on the loan. In either case, the equipment is wo

### Question . The last free cash flow for a company was \$51 million and it is expected it to grow at a constant rate of 4 percent indefinitely. The company's weighted average cost of capital is 12 percent. The company has 25 million shares of outstanding stock, and the current price per share is \$28.50. a. Calculate the company's free cash flow for next year. b. Calculate the value of the company's operations. c. Calculate the value of one share of the company's stock. d. Is the company's stock a good buy? Explain? Question . Andiola Corporation is evaluating whether to lease or purchase equipment. Its tax rate is 30 percent. If the company purchases the equipment for \$1,000,000 it will depreciate it over 5 years, using straight-line depreciation. If the company enters into a 5-year lease, the lease payment is \$200,000 per year, payable at the beginning of each year. If the company purchases the equipment it will borrow from its bank at an interest rate of 11 percent. a. Calculate the cost of purchasing the equipment. b. Calculate the cost of leasing the equipment. c. Calculate the net advantage to leasing. Should the company purchase or lease the equipment?

Question . The last free cash flow for a company was \$51 million and it is expected it to grow at a constant rate of 4 percent indefinitely. The company's weighted average cost of capital is 12 percent. The company has 25 million shares of outstanding stock, and the current price per share is \$28.50. a. Calculate the compa

### International issues and ethics

I understand the concept of the 4ps of marketing but our assignment is asking for a solution specific to Walmart. Explain in detail the implementation of the 4ps marketing mix concept by this company including, competition, target market, product strategy, distribution strategy, communication strategy, pricing strategy, also de

### Assess money supply

You take \$100 that you had kept under your mattress and deposit it into your bank account. If this \$100 stays in the banking system as reserves and if the banks hold reserves equal to 10 percent of deposits, by how much does the total amount of deposits in the banking system increase? By how much does the money supply increase

### Why interest rates vary between credit cards and new US Treasury Bills

Need help figuring why credit card companies offer interest rates on their cards which vary with the current yield on newly issued U.S. Treasury bills. If you want you can just give me a hint and point me give me an internet address where I can find the information myself. Thanks.

### Present value

What is your personal discount rate or rate of preferences? I.e. how much would you pay for a promise of \$1000 to be received one year from now? Would you discount it by 10%, 5%, etc?

### Lockbox/Concentration Banking

A business has four lockbox collection centers that average \$235,00 in payments each day. Payments are invested daily in short-term securities at the collection center banks. Accounts are swept every two weeks and proceeds wire transferred to company HQ. The investment accounts each pay .068% per day, and the wire transfers c

### The Public Sector

First National Bank is fully loaned up with reserves of \$30,000 and demand deposits equal to \$100,000. The reserve ratio is 30 percent. Households deposit \$6,000 in currency into the bank. How much excess reserves does the bank now have, and what is the maximum amount of new money that can be created in the banking system as a r

### Revenue Forecasting

Kate Austen must generate a sales forecast to convince the loan officer at a local bank of the viability of Marina Del Rey, a trendy west-coast restaurant. Austen assumes that next-period sales are a function of current income, advertising, and advertising by a competing restaurant. A. Write an equation for predicting sales i

### Operations management inquiries

1. You need \$50,000 cash throughout the year. Your time is worth \$100 per hour and it takes you a half-hour to get cash from your ATM. Your bank is paying 5 percent per annum passbook savings. a. What is the EOQ? b. What is the total cost at the EOQ? c. How many times per year will you visit your ATM? 2. Consid

### fixed factor of production

For each of the following buisinesses, what is the likely fixed factor of production that defines the short run? a. Potatoe farm of 160 acres b. Chinese restraurant c. Dentis in private practice d. Car dealership e. Bank

### Federal Reserve

The Federal Reserve under Chairman Bernanke was very aggressive in trying to cope with or manage the financial crisis that hit the U.S. in 2007 and 2008. Why do you think the Federal Reserve acted so aggressively? What â??traditionalâ? monetary policies (three standard Fed policies) were enacted by the Fed an

### Introduction to Macroeconomics

Determine if it represents fiscal policy or monetary policy, and explain your answer. Paul Volker was chairman of the Federal Reserve system in the late 1970's and through most of the 1980's. In the late 1970's and into the early 80's the United States was experiencing high inflation, reaching double digits of 10% and more.

### Income Statement

Audio engineer quit job & gave up salary of \$175,000 per year to start own business. Partial income statement below: Revenues: 2010 Rev from sales of products / services \$970,000 Operating costs & expenses: Cost of products / services sold \$355,

### The Fed's Reserve is assessed.

The Federal Reserve purchaseses \$1 million in U.S. Treasury Bonds from a bond dealer, and the dealer's bank credits the dealer's account. The required reserve ratio is 15 percent, and the bank typically lends any excess reserves immediately. Assuming that no currency leakage occurs, how much will the bank be able to lend to its

### Credit card companies: adjusting interest rates

Credit card companies are readjusting interest rates and the amount of annual fees. Should this be allowed or should the Government limit the discretion of the credit card companies. How should the Federal Reserve Bank exercise its authority in this matter.

### Forecasting and Lending

I am having a hard time with these concepts. Please see attached for the items I need help with. Please show your work so I can grasp these concepts and methodology better. A Company has forecast its total funds requirements for the coming year as shown in the following table: Month Amount Month Amount January \$2,0

### Everything else being equal, the higher the interest rate, the higher the future value.

1) Everything else being equal, the higher the interest rate, the higher the future value. Answer: True/False 2) The present value interest factor for i percent and n periods is the inverse of the future value interest factor for i percent and n periods. Answer: True/False 3) The future value of \$100 received today and

### Micro and Macroeconomics Examples

1. Suppose you were having lunch with your best friend who just enrolled in an economics class. He was complaining about how irrelevant the class was, commenting that he saw no useful purpose for economics. According to your friend, â??Iâ??m a nursing major. I will never use this stuff in the real world." Having just completed

### Solving a Federal Reserve Problem

The Federal Government's control of the money supply, which influences interest rates, is the primary toll that policy makers use to impact the macro economy. True or False? I think this would be a true statement.

### the different roles of bank reserves

Consider an individal who moves from Asia to the US and brings with him life savings of \$40,000, which he deposits in a US bank. For each of the cases below, compute the overall change in deposits and reserves in the US banking system as a resultof this new deposit. a) 10% target reserve ratio; no cash drain; no reserve exc

### Money & Banking

Consider a new deposit to the US banking system of \$1000. Suppose that all commercial banks have a target reserve ratio of 10% and there is no cash drain. The attached table shows how deposits, reserves, and loans change as the new deposit permits the banks to "create" money. a) The first round has been completed in the ta

### target reserve ratio

The attached table shows the balance sheet for the Regal Bank, a hypothetical commercial bank. Assume that the Regal Bank has achieved its target reserve ratio. a) What is the Regal Bank's target reserve ratio? b) What is the value of the owners' investment in the bank? c) Suppose someone makes a new deposit to the Reg

### How does economics effect our lives?

1. Suppose you were having lunch with your best friend who just enrolled in an economics class. He/she was complaining about how irrelevant the class was, commenting they saw no useful purpose for economics. According to your friend, â??Iâ??m a nursing major. I will never use this stuff in the real world." Having just complete

### effective fixed rate on the synthetic fixed-rate loan

A company has a variable-rate loan with a bank paying LIBOR plus 65. The company wishes to create a synthetic fixed-rate loan and enters into an interest rate swap paying a swap fixed rate of 9 percent and receives LIBOR. The company also pays an annual swap spread of 35 basis points to the swap dealer. Calculate the effective f

### Stockholders Equity Rate of Return

During the 1970s the average rate of return on stockholders' equity in the U.S. banking industry was consistently higher than the average rate of return in other U.S. industries, while the opposite was the case in the 1980s. Identify the most important reasons for this.

### Federal Reserve tools

What measures and tools does the Federal Reserve have at its disposal to address the economy. What has the Fed employed in the past 2 years to help the economy? Would you consider the measures you identified as effective or unsuccessful? What measures would you recommend at present?

### Economic Profits Explicit and Implicit Costs

A woman managing a photocopying establishment for \$25,000 per year decides to open her own duplicating place. Her revenue during the first year of operation is \$120,000, and her expenses are as follows: Salaries to hired help \$45,000 Supplies 15,000 Rent 10,000 Utilities