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A borrower and lender negotiate a $20,000,000 interest-only loan at a 5 percent interest rate for a term of 15 years. There is a lockout period of 10 years. Should the borrower choose to prepay this loan at any time after the end of the 10th year, a yield maintenance fee (YMF) will be charged. The YMF will be calculated as follows: A treasury security with a maturity equal to the number of months remaining on the loan will be selected, to which a spread of 150 basis points (1.50%) will be added to determine the lender's reinvestment rate. The penalty will be determined as the present value of the difference between the original loan rate and the lender's reinvestment rate.
Required:
a. How much will the YMF be if the loan is repaid at the end of year 13 if two year treasury rates are 2 percent? If two-year treasury rates are 4 percent, what will be the lender's reinvestment rate?
The Ulmer Uranium Company is deciding whether or not to open a strip mine whose net cost is $4.4 million.
Then on December 1, 2013, you sold the bond when the market rate of interest was 6.0%. What's the total dollar return and the percentage return on your initial investment?
If the required return of the stock is 10%, what is the present value of the growth opportunity for this company? (Hint: You need to discuss two cases-with and without retention.)
FNSINC602 Interpret and use financial statistics and tools. Assessment task: Array the data, Organise the data in a ungrouped frequency scale, Construct a grouped frequency distribution and Construct a frequency histogram and ogive of the data
The tax rate is 35 percent. What is the amount of the annual interest tax shield?
Suppose a business owner is trying to decide whether to invest in a new piece of machinery. The machine costs $160,000, and it is expected to generate revenue o
?The underlying stock is currently trading at -0.2, and the risk-free rate is 5.2%.
How might (a) seasonal factors and (b) different growth rates distort a comparative ratio analysis? Give some examples. How might these problems be alleviated?
Happy Times, Inc., wants to expand its party stores into the Southeast. In order to establish an immediate presence in the area, the company is considering.
Alan's inventory averaged $400,000 last year. What was the length of the inventory conversion period?
Demonstrate that your strategy is correct by constructing a payoff table showing the outcomes of expiration.
Additionally, the firm's stock price was $10.50 at the time of the split. How will the split effect retained earnings?
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