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Deseret Resources has received approval for a 5-year term loan from a commer- cial bank for $2 million at a stated interest rate of 8 percent. The loan requires that interest be paid at the end of each year on the balance remaining at the beginning of each year. In addition, a principal payment of $250,000 must be paid at the end of each of the first four years, with the remaining balance being paid off at the end of five years.
The bank will charge Deseret a $50,000 loan- processing fee.
a. What payments are required at the end of each of the five years?
b. What is the effective, pretax cost of this loan?
At the beginning of each period for 10 years, Merl Agnes invests $500 semi annually at 6%. What is the cash value of this annuity due at the end of year 10?
You are given the following information: Stockholders' equity = $3.75 billion, price/earnings ratio = 15.5, common shares outstanding = 12 million, and market/book ratio = 2. Calculate the price of a share of the company's common stock. Round your an..
Proposing a new venture to the management of your company
Timothy Moher owns 440 acres of land on sugar land Michigan. Sugar land is located on St. Mary's River which marks the international border between Canada and the United States. Mohers land is 2 miles from Canada. Two United States customs and border..
Which of these statements answers why bonds are known as fixed income securities?
First National Bank has a credit card department. The average cardholder charges $600 a month, and pays off the entire balance 60 days after the purchase. The cardholders do not pay any interest, but they do pay $25 membership fee, in advance, every ..
You have a portfolio that consists of equity ownership in three firms. You own 800 shares of Stout Drink Company (SDC), 600 shares of Carbon Computing (CC) and 650 shares of Serrano Foods (SF). Their current share prices are $114, $20, and $122, resp..
What is the required return for Dentrix Corporation? The risk-free rate is 2.7%, the risk premium is 7.7, the expected rate of inflation is 3.4% and the company can currently issue bonds at a YTM of 4.9%. The company's beta is estimated to be 0.9.
1.planning models that are more sophisticated than the percent of sales method have2.firms that achieve higher growth
Frey Corp. is experiencing rapid growth. Dividends are expected to grow at 26 percent per year during the next three years, 16 percent over the following year, and then 4 percent per year indefinitely. The required return on this stock is 10 percent,..
Magnus Credit Corp. wants to earn an effective annual return on its consumer loans of 15.25 percent per year. The bank uses daily compounding on its loans.
George bought a car for $26,500. He made a down-payment of $4,500 and financed the rest on a 5-year term with a monthly payment of $575. A) What is the interest rate per month for the loan? B) What is the nominal interest per year? C) What is the eff..
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