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You’ve worked out a line of credit arrangement that allows you to borrow up to $40 million at any time. The interest rate is .44 percent per month. In addition, 4 percent of the amount that you borrow must be deposited in a non-interest-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. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Annual interest rate %
b. Suppose you need $14 million today and you repay it in 6 months. How much interest will you pay? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Interest paid $
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A 5.55 percent coupon bond with ten years left to maturity is priced to offer a 7.0 percent yield to maturity. You believe that in one year, the yield to maturity will be 6.0 percent. What is the change in price the bond will experience in dollars?
Russell’s has annual revenue of $387,000 with costs of $216,400. Depreciation is $48,900 and the tax rate is 30 percent. The firm has debt outstanding with a market value of $182,000 along with 9,500 shares of stock that is selling at $67 a share. Th..
You gather/calculate the following information about Gear to Fear: Fair Value of Gear to Fear (determined by 3rd party): $235M Estimated Costs to Sell Gear to Fear: $ 10M Undiscounted Gear to Fear estimated future cash flows: $500M Present Value of G..
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