Determine the discount d and the proceeds p for this loan

Assignment Help Financial Management

Reference no: EM131575538

In this question we will check if a discount is actually adiscount. Say you are to borrow $100 for a year at a simple interest rate of 10%. Determine the discount D and the proceeds P for this loan. Next take another look at the situation. You take away P dollars and at the end of the year you pay $100 what rate of simple interest did you actually pay and is this rate more or less than 10% of the loan with the discount?

Reference no: EM131575538

Questions Cloud

Issue of preferred stock outstanding : Smiling Elephant, Inc., has an issue of preferred stock outstanding that pays a $5.40 dividend every year, in perpetuity. what is the required return?

Odd dividend policy-current share price : Hot Wings, Inc., has an odd dividend policy. If you require a return of 15 percent on the company’s stock, how much will you pay for a share today?

Mature manufacturing firm-current share price : Antiques ‘R’ Us is a mature manufacturing firm. If you require a return of 9 percent on this stock, what will you pay for a share today?

What are potential risks to the public and to stakeholders : What are the potential risks to a company of unethical behaviors by employees? What are potential risks to the public and to stakeholders?

Determine the discount d and the proceeds p for this loan : Determine the discount D and the proceeds P for this loan.

Offered an investment : You have been offered an investment that will pay you 9% per year. If you invest $15,000, how long until you have $45,000?

Year-to-date-what is your portfolio return : Year-to-date, Yum Brands had earned a 3.20 percent return. what is your portfolio return?

Best estimate of company cost of equity : If the stock sells for $31 per share, what is your best estimate of the company's cost of equity?

What is the bank cost of preferred stock : Holdup Bank has an issue of preferred stock with a $7 stated dividend that just sold for $89 per share. What is the bank's cost of preferred stock?

User Account

All Pages