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You are a manager of FI that has made a four-year $15 million loan that pays annual interest of 7 per cent. The principal is due at the end of the third year.
Question a. One possible strategy is to sell this loan with recourse at an interest rate of 9 per cent. What price should FI receive for this loan?
Question b. The bank has the option to sell this loan without recourse at a discount rate of 9.2 per cent. What price should it receive for this loan?
Question c. If the bank expects a 1 per cent probability of default on this loan, is it better to sell this loan with or without recourse? It expects to receive no interest payments or principal if the loan is defaulted.
Question d. Discuss if the sale of the loan with recourse can change the duration characteristics of the balance sheet. How?
Assume that Gumbel uses a periodic inventory system and that there are 700 units left at the end of the month. Compute the cost of the ending inventory
1. Internal controls are a set of procedures adopted by an organization primarily to check frauds and errors and increase operational efficiency.Consider the aspects of internal control and respond to the following:List ten internal controls that an ..
"Revaluation of non-current asset doesn't impact the recognition of future tax associated with that asset". Evaluate this statement.
Be sure to include an evaluation of the Footnote disclosures regarding Lucent's inventories in your examination. Does explanation for the earnings shortfall provided by Lucent's managers make sense in light of your analysis?
What do you think of this man's actions to pay off debt quickly? Do you think he was being extreme or wise? Would it be hard for you to live in austerity?
During the year, the corporation completed a number of transactions affecting the stockholders' equity.
What is the annualized forward premium or discount on the British pound? (Round answer to 2 decimal places, e.g. 17.54%. Use 360 days for calculation.)
Dorian and Erin file a joint return. In February 2016, Dorian and Erin moved from moved from Minneapolis to Washington, DC, where Dorian was starting a new job. Dorian drove the family car to Washington, DC, a trip of 1,100 miles. How much can they d..
Morganton Company makes one product and it provided the following information to help prepare the master budget for its first four months of operation: Prepare the following budgets for July and August: Sales budget with cash collections. Production ..
In dealing with transactions between companies, accountants are required to make adjustments to nullify the occurrence. However, sometimes these transactions are a bit more complicated because non-controlling interests are present. Discuss fully the..
Describe the procedures you should have performed to audit the share buyback in the annual financial statements of Property Ltd for the year ended 28 February 2006 - Prepare a reconciliation of the goodwill balance as it should appear in the notes..
A budget is a plan, but things don't always go according to plan, what should you do when you notice that reality is different from budget?
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