Current liabilities management

Assignment Help Financial Management

Reference no: EM131558511

Current Liabilities Management

Bill payer has obtained hey short term loan from Jersey Bank and trust the 45,000 loan matures in 180 days Bill wants to use the money to cover start up expenditures for a new business he plans/hopes to have sufficient financing from other investors within the next six months in considering the $45,000 loan Jersey Bank and trust offers Bill two financing options

1) a fixed read loan had the prime rate Plus 2.5% or

2) hey 1.5% above prime variable rate loan currant the prime rate is 6.5% economists are forecasting the prime rate over the next one hundred and eighty days are as follows next 60 days the prime rate will rise by.5% after 90 days the prime rate rise another 1 % after 180 days the prime rate will drop buy 0.5%

Relying on the prime rate has forecasted answer the following

a) calculate the total interest cost over 180 days for a fixed rate loan

b) calculate the total interest costs over 180 days for a variable rate loan

c) which is the lower interest cost loan for the next 180 Days?

Reference no: EM131558511

Questions Cloud

What is the after-tax free-cash flow for year five : what is the after-tax free-cash flow for year five, given a tax rate of 40%? What is the free cash flow?

What must six-month forward rate be to prevent arbitrage : What must the six-month forward rate be to prevent arbitrage?

What is the expected duration of the project : What is the expected duration of the project and assuming you will begin construction on October 1, 2016, what date do you expect to complete?

Involved in the process of issuing new financial securities : Which of the following is NOT an example of an annuity? Which one of the following is NOT involved in the process of issuing new financial securities?

Current liabilities management : Current Liabilities Management-Calculate the total interest costs over 180 days for a variable rate loan.

If the firm grows at its sustainable growth rate : What is the firm’s sustainable growth rate? If the firm grows at its sustainable growth rate, how much debt will be issued next year?

Dodd-frank act or the sarbanes-oxley act : Explain any accounting regulations, such as the Dodd-Frank Act or the Sarbanes-Oxley Act, that affect Bed Bath & Beyond.

Use for debt when calculating cost of capital : If the company has a $46.5 million market value of equity, what weight should it use for debt when calculating the cost of capital?

Minimum amount of collateral necessary to achieve repayment : What is the minimum amount of collateral necessary to achieve repayment, assuming all collateral is lost when the borrower runs away with the profits?

User Account

All Pages