Computing total dollar annual cost of the revolver

Assignment Help Finance Basics
Reference no: EM132847443

Sanders Enterprises arranged a revolving credit agreement of $9,000,000 with a group of banks. The firm paid an annual commitment fee of 0.5% of the unused balance of the loan commitment. On the used portion of the revolver, it paid 1.5% above prime for the funds actually borrowed on a simple interest basis. The prime rate was 3.25% during the year. If the firm borrowed $6,000,000 immediately after the agreement was signed and repaid the loan at the end of one year, what was the total dollar annual cost of the revolver?

Reference no: EM132847443

Questions Cloud

Find the probability that the students get marks : From the data given below, assume it is normally distributed.
Calculate the current value of the firm equity in total : The required rate of return for shareholders is 12%. Calculate the current value of the firm's equity in total and per share
Calculate the value of the stock today : Ultimate Electric, Inc. has just developed a solar panel capable of generating 200 percent more electricity than any solar panel currently on the market
Construct a cash budget for tierney enterprises : Tierney Enterprises is constructing its cash budget. Its budgeted monthly sales are $5,000, and they are constant from month to month. 40% of its customers
Computing total dollar annual cost of the revolver : Sanders Enterprises arranged a revolving credit agreement of $9,000,000 with a group of banks. The firm paid an annual commitment fee of 0.5%
Describe the meaning of the yield curve : 1. Please explain the determining factors of the interest rate and make sure to include hypothetical examples for better clarity.
Explain current long-term government bond yield : A company's common shares are currently trading at $50. It is expected that the company will pay an annual common share dividend of $3.50 next year.
Understanding about the quality of accounting information : 1. Explain your understanding about the quality of accounting information, and how financial reporting could be differ from the economic reality?
Estimating the company wacc : Consider the same estimated costs as in question 23. The company is not planning to issue preferred shares in the future but anticipates a target capital struct

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the appropriate debt ratio

What is the appropriate debt ratio (D/(D+E)) to use for calculating Company X's weighted-average cost of capital?

  Business unit within vw group

If you were the head of a business unit within VW Group, how would you leverage big data to help the company achieve this strategy?

  Benchmark interest rate in response to the pandemic

How will this affect the value of the levered firm and the unlevered firm? Explain the effects on each firm separately.

  What net return did you earn on your el share

During this year, the return on the overall stock market was 11%. What net return did you earn on your El share investment? Assess this return in light of the overall market return.

  Evaluate the company profitability

Companies like Reuters provide updated ratio analysis on publicly traded companies free of charge. Go to www.investor.reuters.com.

  Calculate the net daily advantage of the system

If the lock box makes the cash available 2 days earlier, calculate the net daily advantage of the system. (Do not round intermediate calculations.)

  What risks do property and casualty insurance policies

What risks do property and casualty insurance policies protect against?

  What is the expected gainloss from the forward hedging if

cray research sold a super computer to the max planck institute in germany on credit and invoiced euro10 million

  Calculate green current production and total cost

Essential Sdn Bhd produces recycled garbage bag. Currently, they are using 8 units of capital and 20 workers. Payment for the capital is $25/unit

  Future performance of the firm

Valuation of a firm's financial assets is said to be based on what is expected in the future, in terms of the future performance of the firm, the industry, and the economy.

  What is the company free cash flow for year

What is the company's free cash flow for year 1 of this project?

  Develop a three to five page analysis on the projected

1.develop a three to five page analysis on the projected return on investment for your college education and projected

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