Importance of interest rates
Course:- HR Management
Reference No.:- EM13748168

Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> HR Management

1. Explain the importance of interest rates, and how risk is considered to businesses and economic activity.

2. Construct a pro forma income statement for the first year and second year for the following assumptions:

  • Units of Sales in Year 1: 110,000
  • Price per Unit: $11
  • Variable cost per unit: 30%
  • Fixed Costs: $125,000
  • Income taxes: 15%
  • Interest Expense: $200,000
  • In year 2, Price per unit increases to $11.50, and unit of sales increases by 5%, all other assumptions remain the same.

3. Calculate the sustainable growth based on the following information:

  • D= 30%
  • ROE = 25%

4. Calculate a table of interest rates based on the following information:

a. The pure interest rate is 1.6%

b. Inflation expectations for year 1 = 3%, year 2 =3.5%, years 3-5 =5%

c. The default risk is .1% for year one and increases by .2% over each year

d. Liquidity premium is 0 for year 1 and increases by .2% each year

e. Maturity risk premium is 0 for years 1 and 2 and .2% for years 3-5

Put your comment

Ask Question & Get Answers from Experts
Browse some more (HR Management) Materials
As a manager, you may encounter people from many different countries, each of whom have different perspectives based on their own unique combination of characteristics. Thin
How will my human resource staff be benefical to my employees and customers and Can taking care of my employee also have a negative impact on the customers and the managemen
Employee Benefits Security Administration : Visit the Employee Benefits Security Administration website.What is the mission of the Employee Benefits Security Administration?Wh
This learning module requires you to do background reading in the areas of recruitment, selection and induction. This reading will provide you with the conceptual foundation
Which, if any, of the HR practices described in this case do you think can contribute to greater efficiency and effectiveness of TSA employees? What other practices would yo
Compose an executive summary highlighting the paper's contents and reasoning for your chosen topic.Conduct a SWOT analysis by analyzing the strengths, weaknesses, application
What are the operational challenges associated with developing new boutique hotels? How can boutique hotels maintain a consistent standard level of service without compromisi
Based on your knowledge from a past or present job, explain the difference between a group and a team. Would you say you were a part of a group or a team while working in th