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Loan Amortization
Your company is planning to borrow $1 million on a 3-year, 14%, annual payment, fully amortized term loan. What fraction of the payment made at the end of the second year will represent repayment of principal? Round your answer to two decimal places.
%
Elliott Company sold one T-Bill futures contract when the quoted price was 93.25. When the position was closed out, the price of the T-Bill futures contract was 94.12. Did interest rates increase or decrease? How do you know? What was Elliott’s profi..
Assume that three years ago you purchased a corporate bond that pays 6.5 percent. The purchase price was $1,000. What is the annual dollar amount of interest that you receive from your bond investment?
Suppose your firm has decided to use a divisional WACC approach to analyze projects. The firm currently has four divisions, A through D, with average betas for each division of 0.9, 1.3, 1.4, and 1.5, respectively. What will the WACCs be for each div..
Corporations often use different costs of capital for different operating divisions. Using an example, calculate the weighted cost of capital (WACC). What are some potential issues in using varying techniques for cost of capital for different divisio..
Ying Import has several bond issues outstanding, each making semi-annual interest payments. The bonds are listed in the table below. Bond Coupon Rate Price Quote Maturity Face Value 1 8.70% 106.7 7 years $26,000,000 2 6.90 93.7 10 years 32,000,000 3 ..
BDJ, Inc. has 31,000 shares of stock outstanding with a market price of $15 per share. If net income for the year is $155,000 and the retention ratio is 75%, what is the dividend per share on BDJ Inc.'s stock?
A local dental practice decides to run a Groupon campaign. The campaign offered $345 worth of dental services (such as teeth whitening) for $140. For the total campaign, 250 coupons were sold. Calculate the Groupon campaign profit/loss
Marie Corp. has $1500 in debt outstanding and $2800 in common stock (and no preferred stock). Its marginal tax rate is 40%. Marie's bonds have a YTM of 7.00%. The current stock price (Po) is $40. Next year's dividend is expected to be $2.60, and it i..
Suppose one of the suppliers to Banner offers terms of 3/20, net 60. What is the approximate cost of the costly trade credit offered by this supplier? (Assume 360 days per year)
Suppose an individual invests $40,000 in a load mutual fund for two years. The load fee entails an up-front commission charge of 4.4 percent of the amount invested and is deducted from the original funds invested. In addition, annual fund operating e..
Discuss the following statement: “If a firm has only independent projects, a constant WACC, and projects with normal cash flows, then the NPV and IRR methods will always lead to identical capital budgeting decisions.” What does this imply about the c..
How does reinvestment risk differ from interest-rate risk? Identify and explain the four factors that influence asset demand. Which of these factors affect total asset demand and which influence investors to demand one asset over another?
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