Official development assistance , Financial Accounting

Assignment Help:

1. To qualify as official development assistance (ODA), development loans must have a grant element of at least 25 percent, calculated using a stated annual interest rate of 10 percent. After the Solomon Islands earthquakes, new US Secretary of State John Kerry toured the quake-stricken country and promised the following loan: $100 million, to be amortized over 6 years by 12 semi-annual payments, after a grace period of 4 years during which only interest would be paid semi-annually. The US would charge interest at a stated annual rate of 6 percent. Determine whether or not this loan would qualify as ODA. What is the maximum interest rate the US could charge for this loan to qualify as ODA?

2. One of the projects the US loan would fund is to build earthquake-resistant buildings. The project will begin in March 2013, last for two years and is expected to have the following expenditures: start-up costs of $200,000 paid at the beginning of the first month; rental of equipment to be paid at the beginning of the month that will be $100,000 each month for the first year, but $50,000 each month for the second year;

material costs to be paid at the end of each month that will be $30,000; personnel costs of

$100,000 to be paid at the end of each month; and end-of-project clean-up costs of

$100,000 that will be paid at the end of the last month (February 2015). Suppose that with the fiscal cliff looming in March 2013, Secretary Kerry is only willing to allocate

$3,000,000 of the US loan at the start of the project due to this concern. These funds are put into an account that pays interest at a stated annual rate of 12 percent, compounded monthly. Calculate how much this project needs at the beginning of the second year that would be necessary to cover its expected expenditures.

 

 

 


Related Discussions:- Official development assistance

Presentation method-foreing branches, Presentation method (formerly closin...

Presentation method (formerly closing rate or net investment method) Under this method, the branch operates with a lot of degree of autonomy from the head office. This position i

Which depreciation method would produce the higher npv, Wendy is evaluating...

Wendy is evaluating a capital budgeting project that should last for 4 years. The project requires $ 800,000 of equipment. She is unsure what depreciation method to use in her anal

Determine the price of stock and profit, First's current stock price is $26...

First's current stock price is $260. The price may rise to $300 or fall to $170 in one month. The risk-free interest rate is 18% per year. a. Using the replication portfolio app

Financial accounting, The following items are found in the trial balance of...

The following items are found in the trial balance of M/s Sharada Enterprise on 31st December, 2000. 10 marks Summer 2013 Sundry Debtors Rs.160000 Bad Debts written off Rs 9000 Dis

Analyse the net worth, Igor and Angela were married in 2005, separated in 2...

Igor and Angela were married in 2005, separated in 2011, and divorced recently. At the time of marriage, each had some investments and personal assets. They both worked during the

Straight-line discount amortization, Heathrow issues $2,000,000 of 6%, 15-y...

Heathrow issues $2,000,000 of 6%, 15-year bonds dated January 1, 2011, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $1,728,224.

Activity-based costing (abc), Activity-Based Costing (ABC) An accounti...

Activity-Based Costing (ABC) An accounting method that assigns identifiable costs and allocates common costs to definite product lines or business fragments Also known as pro

Illustration of bankruptcy, Illustration of Bankruptcy Njuguna Mwandawi...

Illustration of Bankruptcy Njuguna Mwandawiro, carrying on a business as a trader in Likoni, Mombasa, finds himself insolvent, and on 15 August 1997 files his petition in bankr

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd