Determine principal balance at the end of the term, Financial Management

1. CompuSystems was supposed to pay a manufacturer $19,000 four month ago and another $14,000 two months from now.  CompuSystems is proposing to pay $10,000 today and the balance in 5 month, when it will receive payment on the major sale to the provincial government.  What will the payment be in five months if the manufacturer requires 18% compounded monthly because the account is overdue?

2. A $40,000 mortgage loan charge interest at 9.75% compounded monthly for a 4 year term.  Month payments were calculated for a 15 year amortization.

a.  What will be the principal balance at the end of the first term?

b.  What will the monthly payment be on renewal for a 3 year term if it is calculated for an interest rate of 9%compounded monthly and an 11 year amortization period?

3.  A $1000, 8.5% coupon, 2 year Government of Canada bond was issued on June 1, 1986.   At what price died it sell on April 27, 1990 if the markets required return was 11.2% compounded semi-annually?

4.  A City can borrow $400,000, at 8% compounded quarterly or can issue $400,000 of bonds paying interest at 4% compounded quarterly.  By law the City must create a sinking fund to retire the bonds at the end of 20 years.  If the sinking fund earns 8% compounded quarterly, which is cheaper- getting the loan or issuing the bonds- and by how much each payment period?

5.  The timber rights to a tract of forest can be purchased for $90,000.  The harvesting agreement would allow 25% of the timber to be cut in each of the first, second, fourth and fifth years.  The purchaser of the timber rights would be required to replant, at its expense, the logged areas in Years 3 and 6. Arrowsmith Lumber calculates that its profit in each of the 4 cutting years would be $50,000 and that the cost of replacing the harvested areas in each Years 3 and 6 would be $20,000.

a. Should Arrowsmith Lumber by the timber rights if its cost of capital is 18%?

b. By what amount would the economic value of Arrowsmith Lumber be increased or decreased if it proceeded with purchasing the timber rights for $90,000?

Posted Date: 2/19/2013 12:30:38 AM | Location : United States

Related Discussions:- Determine principal balance at the end of the term, Assignment Help, Ask Question on Determine principal balance at the end of the term, Get Answer, Expert's Help, Determine principal balance at the end of the term Discussions

Write discussion on Determine principal balance at the end of the term
Your posts are moderated
Related Questions
Social Assistance Program for the Elderly For the elderly destitutes, the Central and many State Governments have designed several social assistance programs. Under the nationa

Considering the following information, what is the price of the share as per Gordon’s Model? Details of the Company Net sales Rs.120 lakhs Net profit margin 12.5% Outstandi

1) Future cost and historical cost: financial decision is based on the future cost and not on the historical cost. The decision related to the future and hence the cost are likely

Describe the general pattern of cash flows from a bond with a positive coupon rate. Cash flows as of a bond with a positive coupon rate consist of periodic interest payments an

COST OF CAPITAL A project's Cost of Capital is the smallest amount of acceptable rate of return/required rate of return on funds committed to the project. It is a compensation

Discuss the three main trends which have prevailed in international business throughout the last two decades. The 1980s brought a fast integration of financial markets and inter

Bond indexation serves the purpose of replicating the performance of a predetermined benchmark as closely as possible. These benchmarks are generally very broader

Q. What do you mean by Wealth Maximization? This is also known as value maximization or net present worth maximization approach, it takes into consideration the time value of m

Discuss the risk associated with Foreign Direct Investment. How do these risks differ from those encountered in domestic investment.

In 2005, Mr. Gordon Brown's brought up a plan of action to help reduce poverty and boost economic development in Africa. The three essential elements of the 2005 development plan