How much would the firm save in interest

Assignment Help Finance Basics
Reference no: EM13261554

Stern Educational TV,Inc.,has decided to buy a new computer system with an expected life of three years at a cost of $200,000. The company can borrow $200,000 for three years at 12% annual interest or for one year at 10 percent annual interest.

A) How much would the firm save in interest over the three year life of the computer system if the one year loan is utilized, and the loan is rolled over (reborrowed) each year at the same 10% rate? Compare this to the 12% three year lone?

B) What if interest rates on the 10 percent loan go up to 15 % in the second year and 18% in the third year? What would be the total interest cost compared to the 12%, three year loan?


Reference no: EM13261554

What will the share price be

Consider a stock with a required return of 5 percent and a most recent dividend of $3.00. It is a growth stock and its dividend will increase by 10% next year and then maint

What capital loss will boston report on this transaction

Boston depreciates oil rigs straight line over 10 years assuming no salvage value. The rig was just sold to Viking Petroleum for $34,000,000. What Capital Gain/Loss will Bos

To what extent do you agree with the view

As some users of accounting information have a poor knowledge of accounting, we should produce simplified financial reports to help them.' To what extent do you agree with t

What is your expected starting salary

Without considering the additional educational years or the time value of money, what is your expected starting salary as well as the standard deviation of that starting sal

What is the expected return on m simon inc

The beta of M Simon Inc., stock is 1.3, whereas the risk-free rate of return is 0.06. If the expected return on the market is 0.13 percent, then what is the expected retur

What is the firm weighted average cost of capital

The U.S. Treasury bill is yielding 2.8 percent and the return on the market is 11.2 percent. The corporate tax rate is 38 percent. What is the firm's weighted average cost of

What is the cost of one contract

The price of a December put futures option is quoted as 5-52. Each Treasury bond futures contract is for delivery of $100,000 in Treasury bonds. What is the cost of one cont

Investment be worth at the end of four years

you are interested in investing $15,000, a gift from your grandparents, for the next four years in a mutual fund that will earn an annual return of 8 percent. What will your


Write a Review

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