Effective annual interest rate on this lending arrangement

Assignment Help Financial Management

Reference no: EM131188088

Come and Go Bank offers your firm a discount interest loan at 8 percent for up to $15 million, and in addition requires you to maintain a 4 percent compensating balance against the amount borrowed.

What is the effective annual interest rate on this lending arrangement? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Reference no: EM131188088

Questions Cloud

What is before-tax cost of capital for this debt financing : Black Hill Inc. sells $100 million worth of 13-year to maturity 11.39% annual coupon bonds. The net proceeds (proceeds after flotation costs) are $973 for each $1,000 bond. What is the before-tax cost of capital for this debt financing?

After-tax market rate of return on development investments : The research and development division of a large corporation is considering the purchase of a new tunneling X-ray microscope for $320,125. The projected net benefits from gains in materials engineering is projected to be $127,000 in today’s real doll..

Annual dividends on this preferred stock : Golden Rod Corps preferred stock is selling for $65.26. The company pays $5.25 annual dividends on this preferred stock. Which rate of return does the investor expect to receive on this stock if the stock is purchased today?

What will your homemade dividend be in two years : You own 1,800 shares of stock in Avondale Corporation. You will receive a $1.50 per share dividend in one year. In two years, Avondale will pay a liquidating dividend of $80 per share. The required return on Avondale stock is 25 percent. Suppose you ..

Effective annual interest rate on this lending arrangement : Come and Go Bank offers your firm a discount interest loan at 8 percent for up to $15 million, and in addition requires you to maintain a 4 percent compensating balance against the amount borrowed. What is the effective annual interest rate on this l..

Cost-volume-profit analysis : Cost-Volume- Profit (CVP) is an excellent tool for analyzing short-term financial decisions. Assume the following current information: What does the variable cost per unit need to be in order to break even (operating margin becomes $0) at this volume..

Treasury bond futures contract with an exercise price : If you buy a put option on a $100,000 Treasury bond futures contract with an exercise price of 95 and the price of the Treasury bond is 120 at expiration, is the contract in the money, out of the money, or at the money? What is your profit or loss on..

What is debt to capital ratio : The treasury operation of Douglas Co. has provided the following information to Business Development so they can estimate their Cost of Capital (Overall or Weighted Average)for applications in appropriation requests: Cost of Debt Pre-tax 6% Marginal ..

Using the modified internal rate of return : Tall Trees, Inc. is using the modified internal rate of return (MIRR) when evaluating projects. The company is able to reinvest cash flows received from the project at an annual rate of 14.23npercent. What is the MIRR of a project if the initial cost..

User Account

All Pages