Determine wellsleys annual financing cost

Assignment Help Financial Management
Reference no: EM131336650

Wellsley Manufacturing Company has been approached by a commercial paper dealer offering to sell an issue of commercial paper for the firm. The dealer indicates that Wellsley could sell a $5 million issue maturing in 182 days at an interest rate of 8.5 percent per annum (deducted in advance).

The fee to the dealer for selling the issue would be $8,000. Determine Wellsley's annual financing cost of this commercial paper financing.

Reference no: EM131336650

Questions Cloud

Explain the process of finding your article : The article is an issue that is important and related to your health field (PUBLIC HEALTH). Explain the process of finding your article and how you determined it was peer-reviewed. NOTE: ARTICLE WAS FOUND IN SCHOOLS LIBRARY DATABAS
Equivalent annual cost calculation : (Equivalent annual cost calculation) Barry Boswell is a financial analyst for Dossman Metal Works, Inc. and he is analyzing two alternative configurations for the firm's new plasma cutter shop. Calculate each project's equivalent annual cost (EAC) gi..
Determine the annual financing cost : Determine the annual financing cost of a 6-month $20,000 discounted bank loan at a stated annual interest rate of 10 percent. Assume that no compensating balance is required.
Absolute value inequality to represent tolerance : Suppose 1.5" long bolts are made by another machine and have to be within 0.125" of 1.5". What is the absolute value inequality to represent this tolerance?
Determine wellsleys annual financing cost : The fee to the dealer for selling the issue would be $8,000. Determine Wellsley's annual financing cost of this commercial paper financing.
Remove the top five elements from the top of the stack : Pop the top three elements of the stack, add them, and push the resultback onto the stack.
Resistors and computer chips : An electronics company produces transistors, resistors and computer chips. Each transistor requires 3 units of copy, 1 of zinc and 2 units of glass. Each resistor requires 3, 2 and 1 units of the three materials and each computer chip requires 2, ..
Minimize the annual financing cost : Assuming that Brandt wishes to minimize the annual financing cost of issuing commercial paper, which dealer should it choose?
Semicontinuous and has nonempty and compact values : Let (X, d) be a metric space and F : X -> X a correspondence. If F is upper semicontinuous and has nonempty and compact values, then F has a fixed point.

Reviews

Write a Review

Financial Management Questions & Answers

  Difference between independent-mutually exclusive projects

Businesses are always looking for ways to raise capital for further expansion or to support themselves through changing economic times. What are the two primary ways a company can raise common equity and why is there a cost associated with reinvestme..

  What will be the effect on cash flows of this sale

Suppose you sell a fixed asset for $110,000 when its book value is $130,000. If your company’s marginal tax rate is 35 percent, what will be the effect on cash flows of this sale (i.e., what will be the after-tax cash flow of this sale)?

  What required return must investors be demanding on stock

Storico Co. just paid a dividend of $1.45 per share. The company will increase its dividend by 24 percent next year and will then reduce its dividend growth rate by 6 percentage points per year until it reaches the industry average of 6 percent divid..

  Fair market interest rate for such bonds

Yield to maturity Heymann Company bonds have 4 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 10%. What is the yield to maturity at a current market price of $871? Would you pay $871 for ..

  Cooperative net income to gauge health of cooperative

Describe how you could use the net present value of cooperative net income to gauge the health of a cooperative. How could you use the net present value of owner’s common stock to gauge the health of your cooperative.. Discuss how you could use these..

  Payments of the mortgage into interest and principal payment

You plan to purchase a $130,000 house using a 15-year mortgage obtained from your local bank. The mortgage rate is 5.25 percent. You will make a down payment of 20 percent of the purchase price. a. Calculate your monthly payments on this mortgage 130..

  Operating exposure can be defined

Operating exposure can be defined as: the future home currency values of the firm's assets and liabilities the extent to which the firm's operating cash flows would be affected by random changes in exchange rates the sensitivity of realized domestic ..

  Discuss the difference between a ppo plan and a pos plan

Click "Types of Health Insurance Plans" and discuss the difference between a PPO plan and a POS plan.- Discuss the type of exclusions that might be found in temporary health insurance coverages.

  Movements in cross-exchange rates

Movements in Cross-Exchange Rates. Last year a dollar was equal to 7 Swedish kronor, and a Polish zloty was equal to $.40. Today, the dollar is equal to 8 Swedish kronor, and a Polish zloty is equal to $.44. By what percentage did the cross-exchange ..

  Most recent contribution format income statement

Miller Company’s most recent contribution format income statement is shown below: Total Per Unit Sales (33,000 units) $198,000 $6.00 Variable expenses 99,000 3.00 Contribution margin 99,000 $3.00 Fixed expenses 44,000 Net operating income $ 55,000. P..

  Estimate the sales price of the tiff-any

You are evaluating a project for The Tiff-any golf club, guaranteed to correct that nasty slice. You estimate the sales price of The Tiff-any to be $400 per unit and sales volume to be 1,000 units in year 1; 1,500 units in year 2; and 1,325 units in ..

  About the sustainable growth rate

Johnson Products earned $3.05 per share last year and paid a $1.50 per share dividend. If ROE was 13 percent, what is the sustainable growth rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Om..

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