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Question: After visiting several automobile dealerships, Richard selects the car he wants. He likes its $10,000 price, but financing through the dealer is no bargain. He has $2,000 cash for a down payment, so he needs an $8,000 loan. In shopping at several banks for an installment loan, he learns that interest on most automobile loans is quoted at add-on rates. That is, during the life of the loan, interest is paid on the full amount borrowed even though a portion of the principal has been paid back. Richard borrows $8,000 for a period of four years at an add-on interest rate of 11 percent.
a. What is the total interest on Richard's loan?
b. What is the total cost of the car?
c. What is the monthly payment?
d. What is the annual percentage rate (APR)?
1) A company has a capital structure of 40% debt and 60% equity. The YTM on the company’s bonds is 9%, and the company’s effective tax rate is 40%. The cost of equity is 13%. What is the company’s WACC? Show your work.
Costs of Borrowing: Come and Go Bank offers your firm a discount interest loan at 9% compensating balance against the amount borrowed. What is the effective annual interest rate on this lending arrangement?
Explain risk vs. reward related to your personal financial goals. Explain how savings and investing are impacted by the time value of money.
What are the 3 basic pro forma financial statements, and why are they prepared? What is the basic assumption and the 4 basic steps required to construct pro forma statements using the percent-of-sales method?
1. interest rates are given as annual rates. if semiannual twice a year compounding is being used then you would make
a study was made to determine whether there is a difference between the proportions of parents in the states of
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Daniel purchased a bond on July 1, 2015, at par of $10,000 plus accrued interest of $300. On December 31, 2015, Daniel collected the $600 interest for the year. On January 1, 2016, Daniel sold the bond for $10,200.
A firm has bonds on the market with 9 years to maturity, YTM of 7.1% and a current price of $915. The bonds make semiannual payments. What is the coupon rate on the bonds?
What is your decision regarding mutual funds? Explain why they are or are not a good investment for you.
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If the offer price is $16 per share and the company's underwriters charge a spread of 8 percent, how many shares need to be sold?
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