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You’ve worked out a line of credit arrangement that allows you to borrow up to $60 million at any time. The interest rate is .585 percent per month. In addition, 6 percent of the amount that you borrow must be deposited in a noninterest-bearing account. Assume that your bank uses compound interest on its line-of-credit loans. a. What is the effective annual interest rate on this lending arrangement? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Effective annual rate % b. Suppose you need $25.38 million today and you repay it in six months. How much interest will you pay? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Total interest paid $
Zap Inc's preffered stock pays out a quarterly dividend of $0.75. The firm's beta on preffered stock is $1.50, the T-bill is 3%, the S&P is 12%. What is the current price of the preffered stock?
Martin & Sons has $4.2 million in net working capital. The firm has total assets with a book value of $48.6 million and a market value of $53.4 million. How do you recommend the firm finance this transaction? Is there a danger that ACME could damage..
Determine the sources of credit available (where can you get credit, advantages and disadvantages of the types).
Considering that some companies follow the conservative approach and some follow the aggressive approach for maintaining working capital
Juniper Design Ltd. of Manchester, England, is a company specializing in providing design services to residential developers. Last year the company had net operating income of $430,000 on sales of $1,100,000. Compute the company’s residual income for..
Given the following information, determine the beta coefficient for Stock J that is consistent with equilibrium: rJ = 12.75%; rRF = 5.7%; rM = 13%. Round your answer to two decimal places.
The balance sheet for Ferguson Corp. is shown here in market value terms. There are 5,000 shares of stock outstanding. Market Value Balance Sheet Cash $ 43,900 Equity $ 373,900 Fixed assets 330,000 Total $ 373,900 Total $ 373,900 The company has decl..
What is your debt payments-to-income ratio if your debt payments total $684 and your net income is $2,000 per month.
Gamer Co. has no debt. Its cost of capital is 10.4 percent. Suppose the company converts to a debt–equity ratio of 1. The interest rate on the debt is 7.5 percent. Ignore taxes for this problem. What is the company’s new cost of equity? What is WACC?
Haskell Corp. is comparing two different capital structures. What is the EPS for each of these plans?
Which of the following is an example of unrelated diversification? Describe how the cost of debt and equity differ from the perspective of accounting measures.
Why should capital budgeting for subsidiary projects be assessed from the parent’s perspective? What additional factors that normally are not relevant for a purely domestic project deserve consideration in multinational capital budgeting?
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