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Because of a job change, Bob has just relocated to the southeastern United States. He sold his furniture before he moved, so he’s now shopping for new furnishings. At a local furniture store, he’s found an assortment of couches, chairs, tables, and beds that he thinks would look great in his new two-bedroom apartment; the total cost for everything is $6,400. Because of moving costs, Bob is a bit short of cash right now, so he’s decided to take out an installment loan for $6,400 to pay for the furniture. The furniture store offers to lend him the money for 48 months at an add-on annual interest rate of 6.5 percent. The credit union at Bob's firm also offers to lend him the money—they’ll give him the loan at an interest rate of 6 percent simple, but only for a term of 24 months. Both Plans require monthly payments with zero balance at the end of the loan.
a. Determine the APR for both loans.
b. How would the APR of the Credit Union loan change, if it was an interest only loan with a lump sum payment at the end of two years and not an installment loan?
Highfield Inc's bonds currently sell for $1,400 and have a par value of $1,000. They pay a $140 annual coupon and have a 20-year maturity, but they can be called in 5 years at $1,540. What is their yield to call (YTC)?
Essence of Skunk Fragrances, Ltd., sells 6,100 units of its perfume collection each year at a price per unit of $391. All sales are on credit with terms of 3/30, net 60. The discount is taken by 50 percent of the customers. What is the amount of the ..
The common stock and debt of Northern Sludge are valued at $60 million and $40 million, respectively. Investors currently require a return of 17.0% on the common stock and 7.0% on the debt. If Northern Sludge issues an additional $24 million of commo..
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A portfolio manager in charge of a portfolio worth $10 million is concerned that the market might decline rapidly during the next six months and would like to use options on the S&P 100 to provide protection against the portfolio falling below$9.5 mi..
River Road Inc. recently reported $185,250 of sales, $140,500 of operating costs other than depreciation, and $9,250 of depreciation. The company had $35,250 of outstanding bonds that carry a 6.75% interest rate, and its federal-plus-state income tax..
Your friend chose an ARM for the purchase of their new home. They would like to determine what the payment schedule will be. You decide to help and determine the following information to help you provide the answer. What is the monthly mortgage payme..
the first step in an external analysis is to determine the industry to which your target business is classified.
As a manager of an Italian clothing manufacturer, you are interested in buying a new high-speed production machine. There are two different companies – both based in the US – that sell this (identical) machine. Company A sells it for $10,900, payable..
Prior period adjustments affect the income of past accounting periods. Can someone explain how prior period adjustments are shown in the financial statements?
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