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A bank offers your firm a revolving credit arrangement for up to $70 million at an interest rate of 1.45 percent per quarter. The bank also requires you to maintain a compensating balance of 5 percent against theunusedportion of the credit line, to be deposited in a non-interest-bearing account. Assume you have a short-term investment account at the bank that pays .85 percent per quarter, and assume that the bank uses compound interest on its revolving credit loans.
a. What is your effective annual interest rate (an opportunity cost) on the revolving credit arrangement if your firm does not use it during the year?
b. What is your effective annual interest rate on the lending arrangement if you borrow $45 million immediately and repay it in one year?
c. What is your effective annual interest rate if you borrow $70 million immediately and repay it in one year?
Determine the price-earnings ratio for Research in Motion for each of the three fiscal years, using basic earnings per share and the ending stock market price. Round to two decimal places.
the widget industry in springfield is competitive with numerous buyers and sellers. consumers dont differentiate among
What is the difference between an IRR preference and an IRR lookback?- What is the advantage of the limited partnership ownership form for real estate syndications?
The Lemon Company made a credit sale of $20,000. The invoice was sent today with the terms, 3/10 net 30. This customer normally pays at the net date. If your opportunity cost of funds is 10% the expected payment is worth how much today?
Bob Brown was recently involved in a minor auto accident. His car was hit from behind, and he, in turn, slammed into the car in front of him.
List additional factors that deserve consideration in a foreign project analysis but are not relevant for a purely domestic project.
ziege systems is considering the following independent projects for the coming yearproject retained investment rate of
Find the modified internal rate of return (MIRR) for the following series of future cash flows if the company is able to reinvest cash flows received from the project at an annual rate of 13.05 percent.
Explain the pros and cons of each method and make a recommendation to the company. In your response, be sure to include a discussion of issuing long-term bonds, issuing additional stock, and securing venture capital.
exotic cuisines employee stock optionsexotic cuisines employee stock optionsas a newly minted mba youve taken a
Discuss the major capital budgeting methods used by corporations to evaluate projects. Why do many corporations continue to use the payback period method? Which method do you prefer? Explain why you prefer this method.
Senbet also had notes payable of $900,000. These notes carried an interest rate of 9%. Depreciation was $110,000. Senbet's tax rate was 35%. a. What was Senbet's net income? b. What was Senbet's operating cash flow?
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