How low would the interest rate on the loan

Assignment Help Business Economics
Reference no: EM131821757

Suppose your firm is seeking a six-year, amortizing $790,000 loan with annual payments and your bank is offering you the choice between a $839,000 loan with a $49,000 compensating balance and a $790,000 loan without a compensating balance. The interest rate on the $790,000 loan is 9.0 percent.

How low would the interest rate on the loan with the compensating balance have to be for you to choose it?

Reference no: EM131821757

Questions Cloud

So this week after looking at yahoo finance : So this week after looking at Yahoo finance I have decided to buy 100 shares of Paypal. I know for myself, I use this payment method a lot when ordering online.
Developer afford to spend now on artificial turf : How much can a private developer afford to spend now on artificial turf provided he must recover his investment in 5 years.
Indicate the amounts reported on the balance sheet : Indicate the amount(s) reported on the balance sheet related to the futures contract on June 30, 2013 and the income statement for December 31, 2013.
Create a simple spreadsheet utilizing compatible application : Create a simple spreadsheet utilizing Excel or a compatible application that will be the primary component of your DSS.
How low would the interest rate on the loan : How low would the interest rate on the loan with the compensating balance have to be for you to choose it?
What is the equivalent annual worth of maintenance costs : What is the equivalent annual worth of the maintenance costs at an interest rate of 10% per year, compounded quarterly?
Discuss show positive cash flows but be in grave trouble : Is it possible for a company to show positive cash flows but be in grave trouble
Determine janelle cost recovery : She sells the asset on March 4, 2009. Determine Janelle's cost recovery in 2005 and 2009
Discuss potential problems with the use of irr : The use of NPV as an investment criterion is said to be more reliable than using IRR. Discuss potential problems with the use of IRR.

Reviews

Write a Review

Business Economics Questions & Answers

  Therefore has monopoly on the sale of fresh flowers

Juanita maintains the only greenhouse in isolated Point Barrow, Alaska, and therefore has a monopoly on the sale of fresh flowers. Her hired-gun statistician estimates that the elasticity of demand for her flowers is -0.5. Is Juanita maximizing her p..

  Illustrate what would be the pes-dollar exchange rate

Illustrate what would be the pes0-dollar exchange rate be if purchasing-power parity holds. If a monetary expansion caused all prices in Mexico to double.

  Determinants of changes in level of consumption spending

In recent years, Consumption spending has made up approximately 70% of total spending in the U.S. economy. Other than income, what are the main determinants of changes in the level of consumption spending in the U.S economy?

  Explain how many of you will transfer to another university

A major state university in the South recently raised tuition by 12%. An economics professor at this university asked his students, "Due to the increase in tuition, how many of you will transfer to another university.

  Write about production economics and decisions

Write about Production Economics and Decisions. Please respond to the following 9 items. While these videos are diverse, the managerial economist should have these in their scope of the field of production economics and decisions that are made.

  Explain cournot competition

Explain Cournot competition. Illustrate and explain strategic substition. Illusrate and discuss the operation of the Cournot model as it relates to the empirical evidence regarding 1) price markups over marginal cost and the number of competitors and..

  Different types of wireless encryption

Identify the four different types of wireless encryption, and indicate which ones provide the best security. Provide a brief explanation of each. Needs to be 150 words

  Subsequent withdrawal increases at the rate

Ten equal annual deposits, $A, are followed by 5 annual withdrawals. The first withdrawal of $12,000 is made at the end of year 11 and each subsequent withdrawal increases at the rate of 8% per year over the previous year’s withdrawal. Which of the f..

  Benefits add to the burden on future taxpayers

Discuss the author(s) contention that in addition to ensuring the solvency of social security, the government should also consider how to increase benefits for recipients. How much would this increase in benefits add to the burden on future taxpayers..

  Explain what kind of preferences would lead to refusal

Let’s assume there are only two goods: food and money. The price of food is $4 per unit and the price of money is $1 per unit. Draw the budget set of a low income person with income $800 without any social program, and under each of the two programs...

  Marginal propensity to consume out of temporary increase

Sandy is planning her consumption over five periods during which she expects her income to be 4, 10, 16, 12 and 8. What is Sandy's permanent income? What is Sandy's marginal propensity to consume out of a temporary increase that boosts first period i..

  What is the long-run optimal input combination

Suppose the production function for pasta is Q = 4kl ; What is the long-run optimal input combination when Q = 16 , r = 4 , and w = 36 and what is the long-run total cost function when r = 4 and w = 36

Free Assignment Quote

Assured A++ Grade

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!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd