Compensating balance versus discount loans. Weathers Catering Supply, Inc. needs to borrow $150,000 for 6 months. State Bank has offered to lend the funds at 9% annual rate subject to a 10% compensating balance. Calculate the effective annual rate of..
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An investment project has annual cash inflows of $5,400, $6,500, $7,300, and $8,600, and a discount rate of 10 percent. What is the discounted payback period for these cash flows if the initial cost is $9,000?
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Security Returns If State Occurs State of Economy Probability of State of Economy Roll Ross Bust .20 –18 % 21 % Boom .80 18 6 Calculate the standard deviations for Roll and Ross by filling in the following table. State of Economy Probability of State..
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Your firm has a net cash inflow for the quarter of -$30 (negative). The beginning cash balance is $15. Company policy is to maintain a minimum cash balance of $5 and borrow only the amount that is necessary to maintain that balance. How much does you..
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Welch Company is considering three independent projects, each of which requires a $5 million investment. The estimated internal rate of return (IRR) and cost of capital for these projects is presented below: If Welch establishes its dividends from th..
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Electronic Products has 35,000 bonds outstanding that are currently quoted at 102.3. The bonds mature in 11 years and carry a 9 percent annual coupon. What is the firm's aftertax cost of debt if the applicable tax rate is 30 percent?
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During the year, Mark Zuckerberg had the following business theft losses and Reid Hoffman (AGI=$50,000) had the following personal casualty losses: · adjusted basis: Mark = $900, Reid = $2,500 · fair market value of asset before event: Mark = $600, R..
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Maggie's Muffins, Inc., generated $2,000,000 in sales during 2013, and its year-end total assets were $1,600,000. Also, at year-end 2013, current liabilities were $1,000,000, consisting of $300,000 of notes payable, $500,000 of accounts payable, and ..
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You find a certain stock that had returns of 12.2 percent, –21.1 percent, 27.1 percent, and 18.1 percent for four of the last five years. Assume the average return of the stock over this period was 10.20 percent. What was the stock’s return for the m..
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Litchfield Design is evaluating a 3-year project that would involve buying a new piece of equipment for 340,000 dollars today. The equipment would be depreciated straight-line to 20,000 dollars over 2 years. In 3 years, the equipment would be sold fo..
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Excel Assignment: What and Where Decisions The Big U operates a coal-fired power plant that burns 4,300 tons of coal per year. Coals from four regions of the country can be burned in the plant. The amount of pollution produced depends on the amount o..
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You’re trying to save to buy a new $195,000 Ferrari. You have $32,000 today that can be invested at your bank. The bank pays 3.9 percent annual interest on its accounts. Required: How long will it be before you have enough to buy the car?
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