What is the effective interest rate

Assignment Help Finance Basics
Reference no: EM132379846

Wilson's Dry Goods has a line of credit with a local bank for $250,000. The loan agreement calls for interest of 7.6 percent with a compensating balance requirement of 5 percent, which is based on the total amount borrowed. What is the effective interest rate if the firm needed $138,000 for one year to cover its expansion costs?

Reference no: EM132379846

Questions Cloud

What amount should it report as the cumulative effect : Bonita Company has recorded bad debt expense in the past at a rate of 1.5% of accounts receivable, based on an aging analysis.
Ocus primarily on internal revenue code for your research : You loaned your roommate $4,500 for next semester's tuition. Your roommate promised to pay you back next summer from his summer employment.
What are some tax issues to consider regarding the tax : What are some tax issues to consider regarding the tax treatment for the loss reimbursement? Identify the key issues as precisely as possible.
Importance of the role of marketing within business : One key area which marketers need to be aware of is how cultural differences can alter the marketing message - Show the importance of the role of marketing
What is the effective interest rate : What is the effective interest rate if the firm needed $138,000 for one year to cover its expansion costs?
What is the intrinsic value of the bond : If your required rate of return is 5.8%, what is the intrinsic value of the bond? Round to two decimal places (Ex. $000.00)
Proceeds from holding the bond to maturity : Consider an annual coupon bond with a face value of ?$100?, 3 years to? maturity, and a price of ?$93. The coupon rate on the bond is 6?%.
What is the yield to maturity of the? bonds : What is the yield to maturity of the? bonds? The yield to maturity of the bonds is __%. (Round two decimal places.)
What minimum rate of return : What minimum rate of return must the T bill earn to meet your requirement of a 2% real rate of return?

Reviews

Write a Review

Finance Basics Questions & Answers

  Prepare journal entries for the listed transactions

Prepare a Stockholders' section of a classified balance sheet as of December 31, 2015 (after taking into consideration your journal entries)

  Do you prefer to lease or buy the machine

A firm needs new copy machine. You can purchase a new one for $30000, or you can lease one for three years for a monthly lease payment of $800.

  What will be the effect on the company eps

Stock Repurchase. Hodgkiss Corporation is evaluating an extra dividend versus a share repurchase. In either case, $9,065 would be spent.

  Compute the effect of the adoption of this project

Use the risk-neutral valuation method to directly show that the risk-neutral discounted value of the existing debt of Unitron is $636,000 higher if the project in Example 13.17 is adopted.

  What annual interest rate is required to accumulate

Suppose the payments are only $16,000 each, but they are made every six ,months, starting six months from now.What will the future value be if the 10 payments were invested at 10 percent annual interest? If invested at Banksouthat 10 compounded se..

  Financee and the store is offering two choices for payment

John wants to by a diamond ring for his Financee and the store is offering two choices for payment: a) pay $5000 cash now or (beer) pay $250 per month

  International aspects of a business decision

As a business owner making a final decision regarding the international aspects of a business decision, you may decide to set up a table with the risks and weigh their relative importance against the rate of return you foresee. You also need to pu..

  Describe the dividend discount valuation model

Dividend Discount Model : - Describe the dividend discount valuation model.  - What are some limitations of the dividend discount model?

  Firms often involve themselves in projects that do not

firms often involve themselves in projects that do not result directly in profits. do these projects contradict the

  Compare the ratios calculated against industry averages

Obtain financial information for Raytheon. You should begin by obtaining an annual report for the company. You should also explore the company's Web site and the Company Directories and Financial Reports.

  Business and consumer reports

Examples of business and consumer reports - Be sure to support your statements with logic and argument, citing any sources referenced

  Describe the composition of the initial riskless portfolio

If the sequence of stock prices that DEW stock follows over the year is $40.00, $42.00, $40.32 and $38.71, describe the composition of the initial riskless

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