About the interest rate

Assignment Help Financial Management
Reference no: EM13809157

What interest rate would make it worthwhile to incur a compensating balance of $20,000 in order to get a 1 percent lower interest rate on a 1 year, pure discount loan of $275,000? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.)

  Interest rate    %  

Reference no: EM13809157

Questions Cloud

Earnings and dividends per share-what is current stock price : ACME Inc’s earnings and dividends per share are expected to grow indefinitely by 5% a year. If next year's dividend is $10 and the market capitalization rate is 8%, what is the current stock price? ACME Inc’s growth will stop after year 3. In year 4 ..
What is the market capitalization rate : Company B does not slow back any earnings and is expected to produce a level dividend stream of $8 a share. If the current stock price is $65, what is the market capitalization rate?
What is the expected real interest rate : The two-year interest rate is 6.5% and the expected annual inflation rate is 3%. What is the expected real interest rate?
Treasury bond-what is the present value of the bond : A 10-year U.S. Treasury bond with a face value of $10,000 pays a coupon of 6.5% every six months. The semi annually compounded interest rate is 5.0%. What is the present value of the bond?
About the interest rate : What interest rate would make it worthwhile to incur a compensating balance of $20,000 in order to get a 1 percent lower interest rate on a 1 year, pure discount loan of $275,000?
Trade credit terms-annualized cost of forgoing the discount : If a firm buys trade credit terms of 4/10, net 60 and decides to forgo the trade credit discount and pay the next day, what is the annualized cost of forgoing the discount assuming a 360 day year?
Abdicating our national sovereignty to foreign regulators : Discuss the move by the SEC towards using international accounting standards (IAS). Do you believe that the use of IASs will make it easier for investors in a global economy, or do you think the SEC is abdicating our national sovereignty to foreign r..
Impact the rating of a bond : Which of the following would impact the rating of a bond?
What is its effective rate and nominal rate : 1) The nominal rate of Bank A is 8% and interests are compounded monthly, what is its effective rate? The effective rate of Bank B is 9.31% and interests are compounded four times a year, what is its nominal rate? Suppose the present value of a 2 yea..

Reviews

Write a Review

Financial Management Questions & Answers

  What is the implied beta coefficient of the stock

Assume that the risk-free rate is 8 percent, the required rate of return on the market (or an average-risk stock) is 13 percent, and the required rate of return on Acme Healthcare stock is 15 percent. What is the implied beta coefficient of the stock..

  Riskier stock exceed required return on the less risky stock

Stock R has a beta of 1.3, Stock S has a beta of 0.8, the expected rate of return on an average stock is 13%, and the risk-free rate of return is 7%. By how much does the required return on the riskier stock exceed the required return on the less ris..

  What is the expected return on the market-risk-free rate

The sales forecast is often the starting point of the budgeting process. Identify and discuss key assumptions that are made in the creation of the sales forecast. How would you defend these assumptions when presenting your budget to the budget commit..

  Calculate the economic manufacturing quantity

The demand for 1,000 units of a part to be used at a uniform rate throughout the year may be met by manufacturing. The part can be produced at the rate of 3 per hour in a department that works 1,880 hours per year. The set-up cost per lot is estimate..

  Explain your choices for reductions and increases

A Guide to the Federal Budget Process. Identify and explain your choices for reductions and increases

  Used as the initial cash flow

Dilwater Furniture purchased a corner lot in Pittsburg five years ago at a cost of $890,000. The lot was recently appraised at $1,070,000. At the time of the purchase, the company spent $80,000 to grade the lot and another $120,000 to pave the lot fo..

  What is the value of this forward contract

A LONG forward contract that was negotiated some time ago will expire in 2.5 years and has a delivery price of $60. The current stock price underlying this forward contract is $65. The risk-free rate with continuous compounding is 7% for all maturiti..

  Find out the nation''s gross domestic product

consumption allowances were 4 billion; personal savings were estimated at $2 billion; imports of goods and services amounted to $6.5 billion; and the exports of goods and services were $5 billion. a. Determine the nation's gross domestic product.

  Situations like this influence firms decision to use payback

A firm has a $100 million capital budge. It is considering two projects that each cost $100 million. Project A has an IRR of 20 percent, and NPV of $9 million, and will be terminated after 1 year at a profit of $20 million, resulting in an immediate ..

  What is the dividend per share

BDJ, Inc. has 31,000 shares of stock outstanding with a market price of $15 per share. If net income for the year is $155,000 and the retention ratio is 75%, what is the dividend per share on BDJ Inc.'s stock?

  Mccormick corporation issued note

McCormick Corporation issued a 4-year, $63,000, 5% note to Greenbush Company on January 1, 2014, and received a computer that normally sells for $49,605. The note requires annual interest payments each December 31. The market rate of interest for a n..

  The financial planning process

The financial planning process

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd