User Account

All Pages

What annual interest rate should sara charge

Assignment Help Accounting Basics
Reference no: EM133150244

Questions -

Q1. Sara wants to know that if she were to invest in $100 million in the debt of REITMMFPE1.The one-year US Treasury rate is 2.53%. In lieu of the investment risk that sara is undertaking, she expects her maximum potential loss in the event of a default by REITMMFPE to be about 3000 basis points. But since REIT MMFPE owns high quality real-estate assets, in the event of a loss Lexi expects to recover about 50% of her loss. If the chance of a default in the coming year is about 15%. What annual interest rate should Sara charge for lending to REIT MMFPE to be adequately compensated for the risk undertaken?

In question above, the expected rate of return of equity investors of REIT MMFPEis10.0%. The corporate tax rate is 21%.If the total market value of all equity for REIT MMFPEis $200 million. Kimwants to know what is the weighted average cost of capital of REIT MMFPE?

Reference no: EM133150244

Questions Cloud

Compute the black-scholes-merton price of the call : The risk-free rate is 5 percent. Construct a table for stock prices of $5, 10, 15, ..., 100. Compute the Black-Scholes-Merton price of the call
What is the total cost forecast : Assume that Lexington Hospital has fixed costs of $10,000,000 and a variable cost (per inpatient day) rate of $200. What is the total cost forecast
Calculate carlisle clinic equity balance as of december : Carlisle Clinic Inc., a for-profit organization, began 2022 with an equity balance of $1,000,000. Calculate Carlisle Clinic equity balance as of December
What will happen to the firm current ratio : Question - The King Carpet Company has $3,080,000 in cash and a total of $12,040,000 in current assets. What will happen to the firm current ratio
What annual interest rate should sara charge : If the chance of a default in the coming year is about 15%. What annual interest rate should Sara charge for lending to REIT MMFPE to be adequately compensated
Analyse the interaction and impact of bio-ecological factors : Analyse the interaction and impact of bio-ecological factors on the health, wellbeing and development of neonates, infants, children and adolescents
What is the current value of the share : The company last paid a dividend of $0.55 on its ordinary shares. If the required rate of return is 7%, what is the current value of the share
Prepare a journals entries by using partial methods : Actual production volume 3483 unit, Total Allocated Rate $10, Fixed Allocated Rate $7. Prepare a journals entries by using partial methods
What is the effective annual rate of interest paid : Alternatively, the policy pays ?$617.32 at the beginning of each year for nine years. What is the effective annual rate of interest paid

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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