Determine the annual financing cost

Assignment Help Financial Management

Reference no: EM131336652

1. Determine the annual financing cost of a 6-month (182 day) $20,000 discounted bank loan at a stated annual interest rate of 10 percent. Assume that no compensating balance is required.

2. Pyramid Products Company has a revolving credit agreement with its bank. The company can borrow up to $1 million under the agreement at an annual interest rate of 9 percent. Pyramid is required to maintain a 10 percent compensating balance on any funds borrowed under the agreement and to pay a 0.5 percent commitment fee on the unused portion of the credit line.

Assume that Pyramid has no funds in the account at the bank that can be used to meet the compensating balance requirement. Determine the annual financing cost of borrowing each of the following amounts under the credit agreement:
a. $250,000

b. $500,000

c. $1,000,000

Reference no: EM131336652

Questions Cloud

Identify specific details to prepare and submit a proposal : Identify specific details to prepare and submit a proposal for the upgraded class. Using the "Final Project Proposal Template" from the Learning Resources, your proposal must include the following items.

What annuity payment must jeremy make : If the annuity requires that Jeremy make monthly investments, what annuity payment must Jeremy make to save $10,000?

Explain the process of finding your article : The article is an issue that is important and related to your health field (PUBLIC HEALTH). Explain the process of finding your article and how you determined it was peer-reviewed. NOTE: ARTICLE WAS FOUND IN SCHOOLS LIBRARY DATABAS

Equivalent annual cost calculation : (Equivalent annual cost calculation) Barry Boswell is a financial analyst for Dossman Metal Works, Inc. and he is analyzing two alternative configurations for the firm's new plasma cutter shop. Calculate each project's equivalent annual cost (EAC) gi..

Determine the annual financing cost : Determine the annual financing cost of a 6-month $20,000 discounted bank loan at a stated annual interest rate of 10 percent. Assume that no compensating balance is required.

Absolute value inequality to represent tolerance : Suppose 1.5" long bolts are made by another machine and have to be within 0.125" of 1.5". What is the absolute value inequality to represent this tolerance?

Determine wellsleys annual financing cost : The fee to the dealer for selling the issue would be $8,000. Determine Wellsley's annual financing cost of this commercial paper financing.

Remove the top five elements from the top of the stack : Pop the top three elements of the stack, add them, and push the resultback onto the stack.

Resistors and computer chips : An electronics company produces transistors, resistors and computer chips. Each transistor requires 3 units of copy, 1 of zinc and 2 units of glass. Each resistor requires 3, 2 and 1 units of the three materials and each computer chip requires 2, ..

User Account

All Pages