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Sound Device Inc

At the beginning of the year, an audio engineer quit his job and gave up a salary of 175,000 per year in order to start his own business, Sound devices, inc. The new company builds, installs and maintain custom audio equiptment for businesses that require high-quality audio systems. A partial income statement for Sound devices,

Comparing the NPV of the Financial Costs and Benefits

Brian and Allen are 30 years old with identical academic records and job history. Both currently have jobs paying $40,000 per year. The only difference between Brian and Allen is their credit score. Allen's credit score is high and he can borrow money at 5%. Unfortunately, Brian's credit score is not very good and banks are onl

Question about moral hazard and adverse selection

If banks face a problem in loan markets when bad credit risks are the ones most likely to seek bank loans, it is described as: a) moral hazard b) moral suasion c) adverse selection d) fraud e) Profit making trouble Which of the above options is correct? Is it moral hazard?

Bond price values

Suppose a $1,000 par-value bond was issued last year with a promised annual rate of return (yield) of 6 percent when market interest rates on comparable securities were also 6 percent. Thus, the bond pays its holder $60 annually in interest. Today, one year later, market interest rates on comparable securities are 10 percent. Th

Conducting an Interest Rate Report

I need help answering the following questions about the attached scenario, please view attached file: 1) Identify decisions made by key organizational stakeholders that are affected by interest rates. 2) identify how interest rates affect the cost of operating a business. 3) Find the current yield curve and interpret t

Competition policy economics

Given the recent melt down in the financial and banking sectors from over leverage, excessive deregulation, and bad loans, what government policy or regulation would you suggest to prevent future occurrences? Economies of several nations have been adversely impacted as a result.

Accounting Costs and Economic Cost summary

Please respond to the following: A company incurs the following monthly costs: Labor $400 Equipment $300 Materials $100 It owns the building (which usually rents for $800) that it uses for the business. The owner gave up his $48000 annual salary as a bank manager to run the business. He doe

Turnaround case

Turnaround Strategies Below are the balance sheet and income statement for 2005 and 2006 of a company that is in financial distress. Balance Sheet for 2005 and 2006 2005 ($) 2006 ($) Cash 20,000 5,000 Accounts receivables 150,000 395,000 Inventories 300,000 200,000 Total current assets 470,000 600,000 Fixed assets, ne

Bank rates

1. A bank pays 2.5% per year on its savings account, while a money market account pays 2.4% per year compounded continuously. The bank's rate is: a. Lower than the money market rate. b. Equivalent to the money market rate. c. Higher than the money market rate, but by less than 0.10%. d. Greater than the money market r

RESERVE REQUIREMENTS

All numbers are in millions. given that reserves are required to be 10% of deposits, Bank A is clearly short on meeting its reserve requirement. In the blank balance sheets, write in the balance sheet positions of each bank after Bank B loans Ban A funds in the federal funds market so that both banks can meet their reverse requi

Simple Pricing

Pricing ATM Machines (Simple Pricing) A bank in a medium-sized Midwestern city, Firm X, currently charges $1 per transaction at its ATMs. To determine whether to raise price, the bank managers experimented with a number of higher prices (in 25 -cent increments) at selected ATMs. The marginal cost of an ATM transaction is $0

The Expected Payoffs

The possible payoffs from Ms. Ketchup's projects (see Section 18.3) have not changed but there is now a 40 percent chance that project 2 will pay off $24 and a 60 percent chance that it will pay off $0. a. Recalculate the expected payoffs to the bank and Ms. Ketchup if the bank lends the present value of $10. Which project w

Credit evaluation

Need help putting together a 2 page paper about how credit is evaluated and explain the criteria that is used to evaluate the creditworthiness of an individual. How might this information help a person build good credit?

BYP6-10 Continuing Cookie Chronicle Accounting Matters

Attached is a example from my book. Natalie is busy establishing both divisions of her business (cookie classes and mixer sales) and completing her business degree. Her goals for the next 11 months are to sell one mixer per month and to give two to three classes per week. The cost of the fine European mixers is expected t

Marginal Analysis / Basic Estimation Techniques

1. You are the manager of the customer service department at a bank and you want to hire customer service representatives for a newly opened bank branch. You realize that you can hire employees with a high school degree (HS) who earn $10,000 annually or employees with a bachelor's degree (B) who earn $20,000. You want to maxi

Adjustable-rate versus fixed-rate mortgages

What are the advantages and disadvantages of adjustable-rate versus fixed-rate mortgages? Identify the conditions that should exist to make adjustable and fixed-rate mortgages favorable to lenders and borrowers at the same time. Which would you suggest for a home buyer at this time?

Annual cost of borrowing

Christy maintains her inventory levels by borrowing cash on daily basis from the bank. She estimates the demand for cash for the coming year will be $17,000 per day for 305 working days. Any money she borrows must be repaid with 9% annual interest. Each time Christy takes out a loan the bank charges a loan origination fee of

Inflationary gap

An economy is facing the inflationary gap shown in the ac­companying diagram. To eliminate the gap, should the central bank use expansionary or contractionary monetary policy? How will the interest rate, investment spending, consumer spending, real GDP, and aggregate price level change as the monetary policy closes the inflatio

Tracking a Purchase

Think about a small purchase ($10 or less) you made recently. (Can be any type of purchase, ex: gas, picture frame, breakfast). How will that purchase affect the economy? Try to trace the effects of your purchase through the economy?how many steps might it take for the money to find its way back to you as part of your income?

Policies & Prospects Associated Situations

For each of the following situations explain which of the policy issues is associated with stance the institution has taken. A)The IMF extends a long-term loan to a nations government to help it maintain publicly supported production of goods and services that the government otherwise would have turned over to private compani

Effective Annual Interest Rates

Bank A offers to lend $10,00 at a nominal rate of 7%, compounded monthly. The loan (principal plus interest) must be repaid at the end of the year. Bank B also offers to lend the $10,000, but it will charge 8%, with interest due at the end of the year. What is the difference in the effective annual rates charged by the two banks

Effective Rate of Interest on Installment Loan

Vroom Motorcycle Company is borrowing $30,000 from First State Bank. The total interest charge is $9,000. The loan will be paid by making equal monthly payments for the next three years. What is the effective rate of interest on this installment loan?

Kissick Co

Record transactions. Use the horizontal model, or write the journal entry, for each of the following transactions that occurred during the first year of operations at Kissick Co a. Issued 200,000 shares of $5-par-value common stock for $1,000,000 in cash. b. Borrowed $500,000 from the Oglesby National Bank and signed a 12

Cash Flow Classifications

Please help with the following problem. Cash Flow Classifications For each of the following items, indicate whether it would be classified and reported under the operating activities (OA), investing activities (IA), or financing activities (FA) section of a statement of cash flows: a. Cash receipts from selling merchandise

Federal Funds Rate and the FOMC

Could someone help with the following true/false questions and explain the answer? Your help is greatly appreciated:) Q. The Federal Funds rate is the interest rate banks charge each other. Q. The primary purpose of the FOMC is to enforce bank regulations.

Variables - discreet and continuous random variables

I'm having problems with this one - Which of these variables are discreet and which are continuous random variables? a. The number of new accounts established by a salesperson in a year. b. The time between customer arrivals to a bank ATM. c. The number of customers in Big Nick's barber shop. d. The amount of fuel in your

Probability - Bank of America

I need help with this question: Bank of America customers select their own 3 digit personal identification number ( pin )for use at ATM's. a. Think of this as an experiment and list four possible outcomes. b. What is the probability Mr. Jones and Mrs. Smith select the same pin? c. Which concept of probability do you use to

Money and Banking

What relationships do you observe between maturity and discount rate and the current price? Calculate the duration of a $1,000 6% coupon bond with three years to maturity. Assume that all market interest rates are 7%. See attached file for full problem description.

Preparing a Bank Reconciliation and Journal Entries for Stan Co.

3. The following information pertains to Stan Co. Cash balance per bank, July 31: $7,263. July bank service charge not recorded by depositor: $28 Cash balance per books, July 31: $7,284. Deposits in transit, July 31: $1,500. Bank collected $800 note for Stan in July, plus $36 interest, less $20 service fee. The collec