Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Company A is a blue chip company, headquartered in United State. It is considering raising $500 million to fund its major expansion in a whole new sector for the next 20 years. Company A can either borrow at a fixed rate of 11% or at a floating rate of prime rate + 7%. Given company A's own projection of its new business, it prefers to borrow at floating rate.
Company B is multi-national corporation based in France. It is also considering raising $500 million to expand its business in United States for the next 20 years. Company B can either borrow at a fixed rate of 15% or at a floating rate of prime rate + 9%. Company B prefers to borrow at fixed rate.
a. Explain the comparative advantage between company A and company B when it comes to borrowing.
b. Suppose you represent a swap bank and now both companies ask you to create an interest rate swap that would help both company save 0.8% in the interest annually. (Company A save 0.8% in floating rate and company B save 0.8% in fixed rate)
c. What is the net profit for your bank annually?
At year-end 2013, Wallace Landscaping’s total assets were $1.5 million and its accounts payable were $415,000. Sales, which in 2013 were $2.6 million, are expected to increase by 30% in 2014. What were Wallace's total liabilities in 2013? What was Wa..
Cortez Art Gallery is adding to its existing buildings at a cost of $2 million. Given a required rate of return of 10 percent, what is the NPV of this project?
What do you predict the exchange rate will be in one year? What do you predict the exchange rate will be in two years?
An inflation-indexed Treasury bond has a par value of $5,000 and a coupon rate of 7 percent. What are total interest payments investor will receive during year
Railway Cabooses just paid its annual dividend of $2.90 per share. The company has been reducing the dividends by 11.9 percent each year. How much are you willing to pay today to purchase stock in this company if your required rate of return is 13 pe..
Suppose that a bank has $5 billion of one-year loans and $35 billion of five-year loans. These are financed by $35 billion of one-year deposits and $5 billion of five-year deposits. The bank has equity totaling $2 billion and its return on equity is ..
A U.S. investor bought a 6 year German federal bond (Bund), the face value of the bonds is 1,000 EUR, the coupon is 1.5%, and the price 1, 125 EUR. At the time of buying the bond, the exchange rate was 1.3824 [USD/EUR], now, three years later, find t..
You need $19,000 to purchase a used car. Your wealthy uncle is willing to lend you the money as an amortized loan. He would like you to make annual payments for 5 years, with the first payment to be made one year from today. He requires a 9% annual r..
The following are properties of an ordinary annuity, except;
A U.S. company needs to raise €50,000,000. It plans to raise this money by issuing dollar-denominated bonds and using a currency swap to convert the dollars to Euros. The company expects interest rates in both the United States and the euro zone to f..
You are offered an investment with a quoted annual interest rate of 15% with monthly compounding of interest. What is your effective annual interest rate? Bank A pays 8 percent interest, compounded quarterly, on its money market account. The managers..
Mathias has been the sole proprietor of a clothing store for many years. He intends to retire after holding a "liquidation sale". He wants to avoid ordinary income from the sale of the business inventory, so he shuts down the store for one month and ..
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd