User Account

All Pages

Calculate the discounted value of the canadian bankers

Assignment Help Financial Accounting
Reference no: EM132904712

The banks of Australian and Canadian companies that purchase electronic tools from HighTech provides letters of credit and are required to conduct payment within 180 days after the goods have been shipped to them. Therefore, the banks issue bankers acceptances to HighTech's bank. There are currently two bankers acceptances that HighTech can request his bank to discount: Bankers acceptance one is from Canada. Its maturity value is $1,500,000 and it will mature in 45 days. The bankers' acceptance commission is 1.35% and the market rate is 1.50%. The other bankers' acceptance is from Australia. Its maturity value is $3000,000 and it will mature in 120 days. The bankers' acceptance commission is 0.95% and the market rate is 1.25%. The CEO mentions that HighTech's pays an average of 1.1% on existing loans. He requires information on whether it is viable to discount any of the bankers' acceptances or not. Calculate the bond equivalent rate that HighTech will receive for each of the bonds when they are discounted and compare it to the average cost of HighTech's debt to determine whether any of the bankers' acceptances should be discounted.

Question:

Problem a) Calculate the value of the Canadian bankers' acceptance at maturity by applying the correct formula

Problem b) Calculate the discounted value of the Canadian bankers' acceptance at maturity by applying the correct formula

Problem c) Calculate the bond equivalent rate of the Canadian bankers' acceptance by applying the correct formula

Problem d) Should the Canadian bankers' acceptance be discounted if you compare it to the average cost of existing loans to HighTech? Provide one reason for your answer

Problem e) Calculate the value of the Australian bankers' acceptance at maturity by applying the correct formula

Problem f) Calculate the discounted value of the Australian bankers acceptance at maturity by applying the correct formula

Problem g) Calculate the bond equivalent rate of the Australian bankers' acceptance by applying the correct formula

Problem h) Should the Australian bankers' acceptance be discounted if you compare it to the average cost of existing loans to HighTech? Provide one reason for your answer.

Reference no: EM132904712

Questions Cloud

What is the cost of cash acquisition : MMB is contemplating a cash offer of $700 million for LLM. What is the cost of cash acquisition? What is Limmerick Lane's cost of unlevered equity?
How regular citizens are using digital technology : We learned how regular citizens are using digital technology and the Internet to create their own digital content and information.
Mass media is pervasive in our culture : Mass Media is pervasive in our culture. Create a calendar on which you record a week in your life.
Determine the amount paid to colter : Determine the amount paid to Colter under each of the Revaluation of asset is recorded; "Bates, Capital" account was credited by P66,000.
Calculate the discounted value of the canadian bankers : Should the Canadian bankers' acceptance be discounted if you compare it to the average cost of existing loans to HighTech? Provide one reason
Advantage of organizing IT security policies by domain : What is an advantage of organizing IT security policies by domain? What is a disadvantage of organizing IT security policies by domain?
How many direct materials does industrial facility gracious : How many direct materials does Industrial facility Gracious have? What is the piece rate material to a laborer with a productivity of 100 or above?
Scale of sculpture affect : How does the scale of a sculpture affect how we respond to it? Does a large sculpture seem more important than a small one?
What is the purpose of halsey plan : Who indicated that the piece rate material to a laborer with a productivity of 100 or above is of typical piece rate? What is the purpose of Halsey plan?

Reviews

Write a Review

Financial Accounting Questions & Answers

  Prepare journal entries for the issuance of preferred stock

Prepare the journal entries for the Issuance of preferred stock for land, Issuance of common stock for cash and Purchase of common treasury stock for cash

  1 all of the following costs should be charged against

1. all of the following costs should be charged against revenue in the period in which costs are

  How much additional tax will owe

Your firm currently has taxable income of $80,900. How much additional tax will you owe if you increase your taxable income by $22,100?

  Provide narrative and solve for the new cost of capital

Provide narrative and solve for the new cost of capital. Provide narrative briefly explain the cost of capital and WACC. solve for the current cost of capital

  What is the present value of the uneven cash flow stream

What's the present value of the following uneven cash flow stream: $0 at Time 0, $100 in Year 1 (or at Time 1), $200 in Year 2, $0 in Year 3

  Journalize transactions using the direct write-off method

Direct write-off method - Journalize the following transactions, using the direct write-off method of accounting for uncollectible receivables

  Describe three additional risks

Describe THREE (3) additional risks that the doctors' practice may expect to face because of the introduction of the new facility

  Calculate tax payable and the charge for 20x8

Calculate tax payable and the charge for 20X8 if the tax due on 20X7 profits was subsequently agreed

  What is typically common about financial statement accounts

Provide several examples of financial statement accounts that are often loosely referred to as reserves. What is typically common about all financial statement accounts that are informally referred to as reserves?

  Questionneed some assistance with a group international

questionneed some assistance with a group international business assignmenttopic-a new buzz word brics is being

  Which statements is true with respect to financial stability

Which statements is true with respect to financial stability? Financial stability ratios provide a basis for determining a company's capacity to improve sales.

  Activity based cost analysis

Activity based cost analysis - Were your results the typical pattern for an activity-based costing analysis? Explain.

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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