Discounts it based on a bank discount rate

Assignment Help Financial Management
Reference no: EM131310905

Jenn borrows $600 from Sue on February 14, 2020 for 18 months at 10.5% simple interest. Then, 3 months before maturity, Sue sells the note to B. Harmless who discounts it based on a bank discount rate of 14%.

a. How much did B. Harmless pay Sue for the note? $  

b. What simple interest rate did Sue actually earn on the $600 that she lent to Jenn for the time that she held the note?

Reference no: EM131310905

Questions Cloud

Simple interest is allowed for part of conversion period : Robert deposits $1475.00 in an account on April 1, 2019 which earns 7.5% compounded quarterly. How much is in the account on September 15, 2024 if simple interest is allowed for part of a conversion period?
What should the no-arbitrage price of the call be : Suppose that, in each period, the cost of a security either goes up by a factor of 2 or goes down by a factor of 1/2 (i.e.,u= 2, d= 1/2). If the initial price of the security is 100, determine the no-arbitrage cost of a call option to purchasse the s..
Assume the bid rate of the australian dollar : Assume the bid rate of a Australian dollar is $.6820 while the ask rate is $.6835 at Bank X. Assume the bid rate of the Australian dollar is $.6845 while the ask rate is $.6855 at Bank Y. Given this information, is it possible to do a locational arbi..
How much did bill pay sam for the note : Jean borrows $1800 from Sam for 8 year(s) at 9.25% compounded quarterly. Then, 3 year(s) before maturity, Sam sells the note to Bill who discounts it based on 10.75% compounded monthly. How much did Bill pay Sam for the note?
Discounts it based on a bank discount rate : Jenn borrows $600 from Sue on February 14, 2020 for 18 months at 10.5% simple interest. Then, 3 months before maturity, Sue sells the note to B. Harmless who discounts it based on a bank discount rate of 14%. How much did B. Harmless pay Sue for the ..
Mentioned for measuring output in the ?nancial sector : What are two methods Doyle broadly mentioned for measuring output in the ?nancial sector? What assumptions must be made about the opportunity costs of various participants in the market in order to derive each? Which measure does Doyle prefer? Why do..
Why are constructive dialogue-changing strategic direction : Why are constructive dialogue and/or changing strategic direction more difficult for a family business than other businesses, even though families are supposed to have closer relationships? Support your response with empirical evidence.
Accurately defines a perpetuity : Which one of the following accurately defines a perpetuity?
Odd dividend policy-company has just paid dividend : Hot Wings, Inc., has an odd dividend policy. The company has just paid a dividend of $10.35 per share and has announced that it will increase the dividend by $9.50 per share for each of the next four years, and then never pay another dividend. If you..

Reviews

Write a Review

Financial Management Questions & Answers

  Basic trade-off between efficiency and equity

There is a basic trade-off between efficiency and equity because A. Income redistribution tends to reduce incentives for efficient behavior. B. People who are efficient dislike equity. C. Pareto improvements can only be made by sacrificing efficiency..

  Analyzing new type of insulation for interior walls

Steele Insulators is analyzing a new type of insulation for interior walls. Management has compiled the following information to determine whether or not this new insulation should be manufactured.

  Requires an initial fixed asset investment

Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.4 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be wo..

  Coupon bond-compute the exact price change

You just purchased a coupon bond with face value $1000, 6% coupons, and three years remaining to maturity. Assume that all market interest rates are 7 %. (a) What is the duration of this bond? Compute the exact price change (using the present value f..

  What is the initial cash outlay and free cash flow

You are the head of finance department in XYZ Company. You are considering adding a new machine to your production facility. The new machine’s base price is $10,900.00, and it would cost another $1,970.00 to install it. What is the initial cash outla..

  What must the coupon rate on these bonds

Red Cedar Corporation has issued a bond with the following characteristics: Hollin Corporation has bonds on the market with 12.5 years to maturity, a YTM of 7.3 percent, and a current price of $1,040. The bonds make semiannual payments. What must the..

  A firm that follows a residual dividend policy

A firm that follows a residual dividend policy will probably have:

  Sales increase-what is its self-supporting growth rate

Maggie's Muffins, Inc., generated $4,000,000 in sales during 2016, and its year-end total assets were $3,000,000. Also, at year-end 2016, current liabilities were $1,000,000, consisting of $300,000 of notes payable, $500,000 of accounts payable, and ..

  About the firms operations and its cash flows

A firm has days' sales in inventory of 105 days, an average collection period of 35 days, and takes 42 days, on average, to pay its accounts payable. Taken together, what do these three figures imply about the firm's operations and its cash flows?

  An example of collateralized bond

An example of a collateralized bond is: Which of the following is a secondary market transaction?

  Net present value and internal rate of return methods

For two mutually exclusive projects, the net present value and internal rate of return methods select different projects if the required rate of return is greater than the discount rate at which the two net present value profiles intersect. If projec..

  Determine the effect of its inventory turnover ratio

Winston Inc. is trying to determine the effect of its inventory turnover ratio and days sales outstanding on its cash conversion cycle. Winston's 2013 sales (all on credit) were $168,000 and its cost of goods sold was 75% of sales. It turned over its..

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