How much is your monthly interest payment

Assignment Help Financial Management

Reference no: EM13942903

You have a line of credit arrangement which allows you to borrow up to $80 million at any time. The interest rate is 0.63% per month. The arrangement also requires a compensating balance equal to 6% of the amount borrowed which must be placed in a non-interest-bearing account. The bank uses compound interest on its LOC loans.

a. If you borrow the entire line, how much will you actually be able to use?

b. How much is your monthly interest payment? What is your periodic interest rate and EAR? c. If you need $19 million and repay it in 10 months, how much interest will you pay?

Reference no: EM13942903

Questions Cloud

Calculate the effect of points to be paid on loan : Calculate the effect of points to be paid on a $200,000 loan at 8%, monthly payments with a 30 year term given the following scenarios: assuming 4 points and the loan is held to maturity.

Clothing depot maintains a debt-equity ratio : The Clothing Depot maintains a debt-equity ratio of .50 and follows a residual dividend policy. The firm needs $2,700 for new investments next year. The after-tax earnings this year are $1,700. What is the amount that the Clothing Depot will pay out ..

Debating between leveraged and unleveraged capital structure : Juno Industrial Products is debating between a leveraged and an unleveraged capital structure. The all equity capital structure would consist of 20,000 shares of stock. The debt and equity option would consist of 14,000 shares of stock plus $170,000 ..

Estimates issue costs including legal and accounting fees : Phillip's Manufacturing wants to raise $15 million to open a new production center. The company estimates the issue costs including the legal and accounting fees will be $530,000. The underwriters have set the stock price at $23 a share and the under..

How much is your monthly interest payment : You have a line of credit arrangement which allows you to borrow up to $80 million at any time. The interest rate is 0.63% per month. The arrangement also requires a compensating balance equal to 6% of the amount borrowed which must be placed in a no..

How much wealth would you have accumulated : If you deposited the following amount per month (letters in your last name X $80) from your pay check from the time you graduate from school until you retire (at age 75) and your employer contributed an extra 6%, how much wealth would you have accumu..

Calculate the firms operating and cash cycles : Using the information below, calculate the firm’s operating and cash cycles.

What was the market risk premium during these 10 years : The average annual return on the Standard and Poor's 500 Index from 1986 to 1995 was 15.8 percent. The average annual T-bill yield during the same period was 5.6 percent. What was the market risk premium during these 10 years?"

Securities return is typically considered the risk free rate : If the risk-free rate is 3 percent and the risk premium is 5 percent, what is the required return? and identify which financial securities return is typically considered the risk free rate?

User Account

All Pages