Determining the compensating balance

Assignment Help Business Management
Reference no: EM131207890

Suppose your firm is seeking an eight-year, amortizing $780,000 loan with annual payments and your bank is offering you the choice between a $828,000 loan with a $48,000 compensating balance and a $780,000 loan without a compensating balance. The interest rate on the $780,000 loan is 8.5 percent.

How low would the interest rate on the loan with the compensating balance have to be for you to choose it? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Reference no: EM131207890

Questions Cloud

Determine the primary security concerns regarding scenario : Determine the primary security concerns regarding the scenario in question. Explain the controls you would implement in order to lessen those concerns.
Discuss how diversification reduces risk : Discuss how diversification reduces risk. Comment on the beta of a portfolio with a large number of randomly selected stocks. (Hint: your discussion should include the increased importance of diversification post 2008 financial crisis.)
Optimal cash replenishment level : Watkins Resources faces a smooth annual demand for cash of $1.67 million, incurs transaction costs of $68 every time the firm sells marketable securities, and can earn 3.0 percent on its marketable securities.
Journalize the required entries to record : Memorial Graphs uses a job-order cost system.- journalize the required entries to record the above summarized operations.
Determining the compensating balance : Suppose your firm is seeking an eight-year, amortizing $780,000 loan with annual payments and your bank is offering you the choice between a $828,000 loan with a $48,000 compensating balance and a $780,000 loan without a compensating balance. The ..
What will be its optimal cash return point : What will be its optimal cash return point? (Use 365 days a year. Do not round intermediate calculations and round your answer to 2 decimal places.)
Relationship between personal ethics and business ethics : What do you feel is the relationship between personal ethics and business ethics? Are they or should they be the same?
What is ethics by jim moors is the article : What is Ethics By Jim Moors is the article. I have to take a stand on this thesis. Prove your Thesisht. Evaluate the claim. Jim Moors claim that computing will transform social institutions.
Have they ever been convicted of a felony : The assignment is to make a pie chart showing the current earning vs. a pie chart the shows the future earnings once goals are meet and include the employee's salary at max of $400.00 weekly. Part 2 of the assignment is to draw up an application ..

Reviews

Write a Review

 

Business Management Questions & Answers

  The difference between a group and a team

Using the overview provided in this week's lecture and readings, how do follower perceptions affect a leader's style? How might you best assess follower perceptions of your leadership style?

  Amount available to buy financial guaranteeif a trust is

amount available to buy financial guaranteeif a trust is established to securitize 100 million in auto loans that paid

  Calculate the bond price today

General Mills has a $1,000 par value, 11-year to maturity bond outstanding with an annual coupon rate of 8.17 percent per year, paid semiannually. Market interest rates on similar bonds are 12.31 percent. Calculate the bond's price today.

  Explain what is the industry price-earnings ratio

Explain What is the industry price-earnings ratio and What is the price-earnings ratio for Ragan

  Why ethics in partnership is important

ethics in partnership is important because of the difficulties that two or more persons have in arriving at a common decision. Partners are under constant pressure to protect their investment.

  Functional areas of business

Describe the functional areas of business that must be integrated into a company's four phases of strategic management that includes thinking, planning, implementation, and feedback.

  Organizational design and management analystability to lead

organizational design and management analystability to lead and facilitate coordination with functional area

  Advertising of the westin plaza

The senior vice president for marketing at Westin Hotels believes that the company's recent advertising of the Westin Plaza in New York has increased the average occupancy rate at the hotel by at least 5%.

  Explain what traits might be detrimental

Explain what traits does Woodside possess that might be supportive to him as he assumes his new position? Explain what traits might be detrimental?

  Question regarding the satellite communications

Refer to Satellite Communications. Now that Jonathan plans to open his owns business, he needs to look at the factors of production. Which of the following is not factor of production?

  Role of government in conducting business in canada

Provide a report on the Canadian business environment that would include the role of government in conducting business in Canada.

  Is strategy supports the three components of organizational

In your initial post, share an analogy that illustrates how IS strategy supports the three components of organizational strategy. The three components of organizational strategy in the managerial levers model are organizational variables, control var..

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