Annualized percentage all-in costs of each alternative

Assignment Help Financial Management

Reference no: EM131545982

Sunny Coast Enterpises (A). Sunny Coast Enterprises has sold a combination of films and DVDs to Hong Kong Media Incorporated for US$$100,000 with payment due in six months. Sunny Coast Enterprises has the following alternatives for financing this receivable: (1) Use its bank credit line. Interest would be at the prime rate of 5% plus 150 basis points per annum. Sunny Coast Enterprises would need to maintain a compensating balance of 20% of the loan's face amount. No interest will be paid on the compensating balance by the bank. (2) Use its bank credit line but purchase export credit insurance for 1% fee. Because of the reduced risk, the bank interest rate would be reducted to 5% per annum without any points.

A. What are the annualized percentage all-in costs of each alternative?

B. What are the advantages and disadvantages of each alternative?

C. Which alternative would you recommend?

Reference no: EM131545982

Questions Cloud

Create an implementation plan for the integration of a mis : Assume you are going to conduct some research in the field of toy making. What are some of the items for which you would want to collect data?

Net benefits for the project using the analysts predictions : New City is considering building a recreation center. Calculate the present value of net benefits for the project using the analysts’ predictions.

Analyze the type of training technology : Create a job aid that can be used to improve team performance within your organization.

Explain the type of discrimination and harassment : Identify a situation that could be considered an example of discrimination and harassment in the workplace. This can be something that you have experienced.

Annualized percentage all-in costs of each alternative : What are the annualized percentage all-in costs of each alternative? What are the advantages and disadvantages of each alternative?

Describe what makes up a hostile work environment : Research hostile work environments and how they affect employees.

Is james guilty of embezzlement : James, a successful stockbroker, gives a lecture about investing. Is James guilty of embezzlement? Why or why not?

Define the relevant law utilized by the court : Identify and define the relevant law utilized by the court in determining outcome of the case. Should race and color be permissible bona fide qualifications.

Compute the total current value of the company amazon : Compute the total current value of the company Amazon and its implied stock value.

User Account

All Pages