Which is the higher interest rate

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Reference no: EM131994950

1. An online bank is offering to pay 0.25 % interest per month on deposits. Your local bank offers to pay 0.75 % interest quarterly (every 3 months). Which is the higher interest rate? (Round to four decimal places)

The EAR for the online bank is ____

The EAR for the local bank is ____

2. A levered firm has a target capital structure of 30 percent debt and 70 percent equity. The aftertax cost of debt is 5.1 percent, the tax rate is 35 percent, and the cost of equity is 13.1 percent. The firm is considering a project that is equally as risky as the overall firm. The project has an initial cash outflow of $1.2 million and annual cash inflows of $516,000 at the end of each year for 3 years. What is the NPV of the project?

$64,001.03

$69,856.82

$67,565.33

$60,174.68

$93,322.15

Reference no: EM131994950

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