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1. Total Cost: An oil company arranged a $10,000,000 revolving credit agreement with a group of small banks. The firm paid an annual commitment fee of one-half of one percent of the unused balance of the loan commitment. On the used portion of the loan, it paid 1.5 percent above prime for the funds actually borrowed on an annual, simple interest basis. The prime rate was at 9 percent for the year. If it borrowed $6,000,000 immediately after the agreement was signed and repaid the loan at the end of one year, what was the total dollar cost of the loan agreement for one year?
2. Annual Cost: Suppose the credit terms offered to your firm by your suppliers are 2/10, net 30 days. Out of convenience, your firm is not taking discounts, but is paying after 20 days, instead of waiting until Day 30. You point out that the nominal cost of not taking the discount and paying on Day 30 is approximately 37 percent. But since your firm is not taking discounts and is paying on Day 20, what is the effective annual cost of your firm's current practice, using a 365-day year?
Assume Starbucks consumers 100 million pounds of coffee beans per year. As the price off coffee rises, Starbucks expects to pass along 60 percent of the cost to its customers through higher prices per cup of coffee.
Describing the importance of the concept of present value therefore important for corporate finance and is often the very first topic taught in any finance class.
Calculation of NPV and IRR and MIRR and Profitability Index and Besides future cash flows what other financial criteria would you consider in making your decision between two or more alternatives
Assess risks and opportunities in terms of economic. A analysis of the case study "AccuForm: Ethical leadership and its challenges in the era of globalization"
Assume you sell for $100,000 a 10 percent ownership stake in a future payment one year from now of $1.5 million. What are you saying about the implied return for the 10 percent owner? aWhat is the present value of the entire $1.5 million, using the i..
Suppose you have two hundred shares of Somner Resources preferred stock, which currently sells for $40 per share and pays annual dividends of $3.40 each share.
Red, Inc., Yellow Corporation, and Blue firm each will pay a dividend of $2.85 next year. The growth rate in dividends for all three firms is 5%.
Ruben intends to sell his consumers a special round-trip airline ticket package. He is able to purchase the package from airline carrier for $150 each.
Peter, a president of a company produces power transformers for personal computer manufacturers. Peter's choice of the various methods by which a new model of transformer can be built has been narrowed to 3 alternatives.
Propose to launch a new computerized assembly line, which costs $5,000,000, for replacing the existing assembly line.
You are currently only invested in the Natasha Fund (aside from risk-free securities). It has an expected return of 14 percent with a volatility of 20 percent. Currently, the risk-free rate of interest is 3.8 percent.
Dozier Corporation is a fast-growing supplier of office products. What is Dozier's terminal, or horizon, value? What is the current value of operations for Doziers?
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