Loan with the compensating balance

Assignment Help Finance Basics
Reference no: EM131222504

Suppose your firm is seeking a five year, amortizing $210,000 loan with annual payments and your bank is offering you the choice between a $215,500 loan with a $5,500 compensating balance and a $210,000 loan without a compensating balance. The interest rate on the $210,000 loan is 10.0 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: EM131222504

Questions Cloud

Qtip election for the assets : The day after Kenny died, Melissa gave Kenny's children and grandchildren each $22,000 then left for France to stay with her mother. Would a QTIP election for the assets transferred to Melissa be available?
Two stocks and form a zero-risk portfolio : Consider two risky stocks (their variances are different from zero), which are perfectly negatively correlated, i.e., their correlation is equal to -1. Is it possible to combine these two stocks and form a zero-risk portfolio (variance of zero)? I..
How are the two types of friends similar : Dailey offers a couple of different definitions of a friend, a traditional definition and a social-networking site definition. How are these two types of friends similar, and how are they different?
Determine the feedback transfer function : A negative-feedback amplifier has a closed-loop gain of Af = 100 and an open-loop gain of A = 5 × 104. - Determine the feedback transfer function β.
Loan with the compensating balance : 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.)
What is the defect level before and after applying : Compare both the entry and exit levels of quality for individual QA alternatives. That is, what is the defect level before and after applying these specific QA alternatives.
Paying interest semi-annually : What will be the worth of a bond with a par value of $1000 earning a coupon interest rate of 12% and paying interest semi-annually at the end of the fifth year if the cost of capital is 8%.
Identify the databases and search words you would use : Consider how you would extract the relevant information from the articles. How would you take the information and organize it in a way that was useful? How could you take the step from simply having useful knowledge to gaining wisdom?
What is the annual net income : Their annual expenses were mortgage interest of $65,000, depreciation of 3% of the purchase price of the shopping center, and taxes, repairs, and insurance totaling $64,300. What is the annual net income?

Reviews

Write a Review

 

Finance Basics Questions & Answers

  You have been asked by manager in organization to put

you have been asked by a manager in your organization to put together a training program explaining net present value

  What is the current market piece of these bonds

1. Interest on a certain issue of bonds is paid annually with a coupon rate of 8%. The bonds have a par value of $1,000. The yield to maturity is 9%. What is the current market piece of these bonds? The bonds will mature in 5 years.

  Find erb if the return of a riskless portfolio composed

Let the expected returns of A and B be equal to .09 and ErB, respectively. Also, suppose that the standard deviations are σA =.04 and σB =.10, and the two securities are perfectly positively correlated. Find ErB if the return of a riskless portfolio ..

  Current changes proposed by iasb

What are some current changes proposed by the International Accounting Standards Board and how it will affect U.S. GAAP?

  Amazoncom stock prices gave a realized return of 5 -5 10

amazon.com stock prices gave a realized return of 5 -5 10 and -10 over four successive quarters. what is the annual

  For what range of stock prices would butterfly spread lead

Construct a table showing the profit from the strategy. For what range of stock prices would butterfly spread lead to a loss?

  A bond has an average return of 63 percent and a standard

a bond has an average return of 6.3 percent and a standard deviation of 3.8 percent. what range of returns would you

  Computation of expected rate of return using capm approach

Computation of expected rate of return using CAPM approach and what is the default risk premium on the corporate bond

  Why is there a social cost to monopoly power

Why is there a social cost to monopoly power? If the gains to producers from monopoly power could be redistributed to consumers, would the social cost of monopoly power be eliminated? Explain briefly.

  Capital expenditure budget

Capital Expenditure Budget

  What is the probability that the student is from ucla

What is the probability that the student is from UCLA or chooses football? What is the probability that the student is from Duke, given that the student chooses basketball? What is the probability that the student is from Maryland and choosessoccer?

  Objective 1 understand the effect that country and regional

objective 1 understand the effect that country and regional culture ethics and law have on the business practices of

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