The effective rate if the compensating balance is doubled

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Reference no: EM132036819

1. The stated bank loan rate is 8%, but the loan requires a compensating balance of 10% on which no interest is earned. What is the effective rate if the compensating balance is doubled to 20%? (Show your calculations on Texas instruments Baii plus calculator)

2. Project L costs $35,000, its expected cash inflows are $8,000 per year for 8 years, and its WACC is 9%. What is the project's NPV? Round your answer to the nearest cent.

3. Construct an Income Statement for INSTA Corporation given the following information. $5 million assets ( of which $500,000 cash and $1.5 long term investments); $3 million debt (of which 30 % is short term); $1.2 million bond payable 2020; $500,000 land; and $750,000 retained earnings.

Reference no: EM132036819

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