Calculate the loan annual financing cost

Assignment Help Finance Basics
Reference no: EM131133284

1. Van Buren Resources, Inc., is considering borrowing $100,000 for 182 days from its bank. Van Buren will pay $6,000 of interest at maturity, and it will repay the $100,000 of principal at maturity.

a. Calculate the loan's annual financing cost.

b. Calculate the loan's annual percentage rate.

c. What is the reason for the difference in your answers to parts a and b?

2. Determine the annual financing cost of forgoing the cash discount under each of the following credit terms:

a. 2/10, net 60

b. 1½/10, net 60 c. 2/30, net 60

d. 5/30, net four months (assume 122 days) e. 1/10, net 30

Reference no: EM131133284

Questions Cloud

What were his main ideas about human nature : What ideas/events helped shape his beliefs? What were his main ideas about human nature? What did he believe the role of the citizen in society was? And when did he believe society best functioned?
Answer the following questions for e business : answer the following questions for e-Business- What is micromarketing and how can an online ecommerce company micro-segment their consumers using online data?
Consumer confidence disposable income and recessions : Plot the level of the index of consumer sentiment against the growth rate of disposable income per person. Is the relationship positive?
Makes the pv of the future cash flows : 1. The IRR for a project is the discount rate that: a. sets the PV of the projectAc€?cs
Calculate the loan annual financing cost : 1. Van Buren Resources, Inc., is considering borrowing $100,000 for 182 days from its bank. Van Buren will pay $6,000 of interest at maturity, and it will repay the $100,000 of principal at maturity.
Discuss how the belief in the new economy : Discuss how the belief in the New Economy, combined with the increase in stock prices, affected consumption spending.
Calculate the annual eva in a typical year : NPV and EVA A project costs $2.5 million up front and will generate cash flows in perpetuity of $240,000. The firm's cost of capital is 9%. a. Calculate the project's NPV.
How did versailles symbolize authority of the french king : In what ways did the new science of Copernicus, Brahe, Kepler, and Galileo challenge not only the Aristotelian cosmos--foundation of all medieval science--but also the claims of the church?
How these changes in expectations affect output today : A new president, who promised during the campaign that she would cut taxes, has just been elected. People trust that she will keep her promise, but expect that the tax cuts will be implemented only in the future.

Reviews

Write a Review

 

Finance Basics Questions & Answers

  How much will the firm have saved at the end of year 4

Dressler Engine Tuning just decided to save money each year for the next 4 years to help fund a new building. If it earns 5.5 percent on its savings, how much will the firm have saved at the end of year 4?

  What is a money market hedge and how is it constructed

What is a money market hedge? How is it constructed? Suppose you are the French representative of a company selling soap in Canada.

  Purchase convenience products

A consumer expects to purchase convenience products:

  Logical arguments supporting approach

What are the logical arguments supporting this approach? What is the goal?

  A risk-free zero-coupon bond with a 5000 face value has ten

q1. consider a zero-coupon bond with a 1000 face value and ten years left until maturity. if the ytm of this bond is

  Amount of funds-lockbox arrangement

J-Mart, the nationwide department store chain, processes all its credit sales payments at its suburban Detroit headquarters.

  Rate of growth if a firms earnings increase from 300 per

rate of growth. if a firms earnings increase from 3.00 per share to 4.02 over a 6-year period what is the rate of

  Find portfolio expected return and standard deviation

Irene Adler is planning investing in the common stock of Holmes and Watson. The following information are available for the two securities.

  How large of a sales increase can the company achieve

How large of a sales increase can the company achieve without having to raise funds externally? Round your answer to the nearest cent.

  What are examples of regulatory issues that affect the

what are examples of regulatory issues that affect the controlling aspect of a strategic plan? what are examples of

  What is the project discounted payback period

Assume that the appropriate discount rate is 10% and that the firm's tax rate is 40%. What is the project's discounted payback period?

  Contract case

Big Time Toymaker (BTT) develops, manufactures, and distributes board games and other toys to the United States, Mexico, and Canada. What facts may weigh in favor of or against Chou in terms of the parties' objective intent to contract?

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