Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Bendigo Bank has received a loan application from one of its clients- Adelaide Building and Construction. The bank has a two-stage approach for handling commercial loan applications. In the first stage, it has to decide whether the loan can be approved. In second stage, the bank decides upon what interest rate to charge the borrower. a) Altman's Z-score = (1.2 x Working capital-to-total assets ratio) + (1.4 x Retained earnings-to-total asset ratio) + (3.3 x Earnings before interest and taxes-to-total asset ratio) + (0.6 x Market value of equity-to-book value of long-term debt ratio) + ( 0.999 x Sales-to-total asset ratio) = ((1.2 x 0.04) + (1.4 x 0.3) + (3.3 x 0.1) + (0.6 x 0.9) + (0.999 x 1.5) = 0.048 + 0.42 + 0.33 + 0.54 + 1.4985 = 2.8365
As the Z score 2.8365 is less than 2.99 but between 1.81. Thus, we can conclude that Adelaide Building and Construction is in the "grey zone" and has a moderate probability to go bankrupt and should not approve the loan.b) Assume that the bank decided to approve the loan application; it now decides what interest rate to charge. The bank currently charges a base lending (risk-free) rate of 4 per cent. It expects a probability of default of 7 per cent for this loan. If defaulted, for this type of loans, the bank recovers on average 80 per cent of loan value and expects the same recovery rate for this loan.
Problem 1: Calculate required (expected) rate of return on this loan
create the journal entries required for each of the situations described:- Make the journal entry to record the adoption of the annual budget.
Was the court correct in the following cases below, why or why not. Please explain
Payment of tax penalty, fine and surcharge120,000 Insurance premium on life of an officer with Milan as beneficiary 240,000. How much should timing differences
Which portfolio had the highest degree of diversification over the sample period? How is diversification measured in this statistical framework?
How can create a report to these operations managers explaining the reasons for the depreciation policies adopted by Albatross Ltd.
The Morgan Company plans to borrow money to purchase an office building for its headquarters. How much will Morgan pay monthly on their mortgage
In order to track expenditures local government uses a "chart of accounts" describe how the chart of accounts functions and why it is used for financial control
Find out price of Television if you have bought it through bank loan on compound interest basis and you are paying Rs.5000 in the start of each year
Our discussion this week will focus on the factors listed on page 649 (Principles of Auditing and Other Assurance Services. 20th ed.) which are likely to be material from a qualitative perspective. If you carefully consider those factors listed, many..
Find The balance of the Provision for Sick Leave account in the financial statements of Beaches Ltd for the year ended 30 June 20X2 would be
Using what you have learnt and your own thinking; what are the Factors that can affect exchange rates in the short run and in the long run.
What would be the amount and direction of the change to Retained Earnings as a result of the declaration and distribution of this stock dividend
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd