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Robert is considering the purchase of 80 acres of land South Texas for $3,256.38 per acre. A bank will loan him $3,030.00 per acre of land and the loan will be fully amortized over 12 years at 9%. The outstanding balance of loan will be paid at the end of the fifth year. Assume that the marginal tax rate is 14% and the inflation rate is 3%.
Calculate the loan payment.
a. $423 b. $578
c. $272 d. None of the answers are correct
Calculate the interest paid in the second year.
a. $259 b. $244
Calculate the tax savings from interest payments in the first year.
a. $36 b. $38.18
c. $34 d. None of the answers are correct
Calculate the loan balance at the end of the second year.
a. $2,879 b. $2,536.84
c. $2,715 d. None of the answers are correct
Herbert currently has $47335 in a savings account with his local bank, but unfortunately he doesn't remember the interest rate or compounding period on this account. Fortunately, a quick look at his bank's website indicates that all of their savings ..
A $15,000 bond has semi-annual coupons and matures at par in 15 years. It is bought at a discount to yield j2 = 11%. The adjustment for book value at the end of 10 years is $41.62. Determine the purchase price.
The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 17 percent a year for the next 4 years and then decreasing the growth rate to 3 percent per year. The company just paid its..
Why do you think there are so many filing statuses? Do you think any could/should be eliminated and why? Include examples in your discussion along with the appropriate IRS code section. Be sure to note your sources in APA format.
A company estimates they will sell 100,000 units (@$10/unit) of a new product starting from year 1 and sales units will grow at 6% for four years until year 5. Fixed costs are $400,000 annually. Variable costs are $5/unit. All sales, variable and fix..
Using the DCF approach, what is its cost of common equity? what is your estimate of Callahan's cost of common equity?
A house is priced at $125,000. A down payment of $25,000 has been made. Equal payment will be installed every month, so that the loan can be repaid in 10 years. The annual interest rate is 12.00%, compounded monthly. What is the monthly payment for t..
Sunset, Inc., has a book value of equity of $13,395. Long-term debt is $7,625. How much cash does the company have? What is the value of the current assets?
A five-year project has an initial fixed asset investment of $340,000, an initial NWC investment of $36,000, and an annual OCF of −$35,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required re..
The December 31, 2013 balance sheet of Schism inc. showed long-term debt of $1,395,000 $139,000 in the common stock account and $2,640,000 in the additional paid-in surplus account. The firm’s net capital spending for 2014 was $950,000 and the firm r..
what is the project's NPV using the new required rate of return? How much did the project's NPV change as a result of the rise in interest rates?
Using workshop readings and your own online research, write a three-page paper evaluating the Affordable Care Act as an example of federal health policy development, its ramifications on public health, and how the ACA does not fit into the traditiona..
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