A company has decided to issue a 120-day bank-accepted bill to raise additional funding of $250 000 to buy equipment. If the bank has agreed to discount the bill at a yield of 7.65% per annum, what will be the face value of the bill?
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A company has decided to issue a 120-day bank-accepted bill to raise additional funding of $250 000 to buy equipment. If the bank has agreed to discount the bill at a yield of 7.65% per annum, what will be the face value of the bill?
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- A firm needs $1.2 million in additional funds. These can be borrowed from a commercial bank with a loan at 7 percent for one year or from an insurance company at 9 percent for six years. The tax rate is 30 percent. What will be the firm's earnings under each alternative if earnings before interest and taxes (EBIT) are $415,000? Round your answers to the nearest dollar. Commercial bank: $ Insurance company: $ If EBIT will remain $415,000 next year, what will be the firm's earnings under each alternative if short-term interest rates are 5 percent? Round your answers to the nearest dollar. Commercial bank: $ Insurance company: $ If EBIT will remain $415,000 next year, what will be the firm's earnings under each alternative if short-term interest rates are 13 percent? Round your answers to the nearest dollar. Commercial bank: $ Insurance company: $A commercial bank is planning to give a loan of $3,000,000 to a firm. The bank expects to charge an up-front fee of 0.15% and a service fee of 0.04%. The loan has a maturity of 10 years. The cost of funds (and the RAROC benchmark) for the commercial bank is 12%. The commercial bank has estimated the risk premium on the loan to be approximately 0.20%, based on three years of historical data. The current market interest rate for loans in this sector is 12.15%. The 99th (extreme case) loss rate for borrowers of this type has historically run at 4%, and the dollar proportion of loans of this type that cannot be recaptured on default has historically been 85%. The 'bank's Return on Equity (ROE) ratio is 13%. Using the risk-adjusted return on capital (RAROC) model, should the commercial bank make the loan?A growing company plans to borrow IDR 1,000,000,000 for 5 years from a bank. Bank Sweet is willing to provide loans with an interest of 21% with installments every 6 months. Another bank, namely Bank Sour, is willing to provide a loan with a modest interest rate of 19%, to be paid every 6 months, but on the condition that the company must make a deposit for the repayment fund in the bank with an interest of 14% every 6 months. Which alternative should be chosen? Calculate the amount of savings that can be made every semester!
- An accounting firm agrees to purchase a computer for $180,000 (cash on delivery) and the delivery date is in 270 days. How much do the owners need to deposit in an account paying 0.85% compounded quarterly so that they will have $180,000 in 270 days? (a) State the type. sinking fund amortization present value future value ordinary annuity (b) Answer the question. (Round your answer to the nearest cent.) $An investment will pay $20,900 at the end of next year for an investment of $20,000 at the start of the year. If the bank offers an interest of 2.5% over the same period, what is the net value of the decision to proceed with the investment in terms of dollars today? Hint: The net value in terms of dollars today is the net value computed at time zero. -$500 + $500 -$400 +$390 +$400 -$390A company makes fixed annual payments to a sinking fund to replace equipment in five years’ time. The equipment is valued at £200,000 and interest rates are 10%. How much should each payment be? How would these payments change if the company could put an initial £20,000 into the fund?
- L& T Corporation is considering an investment proposal in which a working capital investment of $15,000 would be required. The investment would provide cash inflows of $2,000 per year for six years. The working capital would be released for use elsewhere when the project is completed. If the company's discount rate is 10%, the investment's net present value is closest to: The PV factor for $1 annuity for six years at 10% is 4.355 and PV of $1 over 6 years at 10% is 0.564 A. $6,290 B. $(6,290) C. $3,000 D. $2,170Ipswich Corporation is considering an investment opportunity with the expected net cash inflows of $300,000 for four years. The residual value of the investment, at the end of four years, would be $70,000. The company uses a discount rate of 14%, and the initial investment is $290,000. Calculate the NPV of the investment. Present value of an ordinary annuity of $1: 12% 13% 14% 15% 1 0.893 0.885 0.877 0.87 2 1.69 1.668 1.647 1.626 3 2.402 2.361 2.322 2.283 4 3.037 2.974 2.914 2.855 5 3.605 3.517 3.433 3.352 Present value of $1: 12% 13% 14% 15% 1 0.893 0.885 0.877 0.87 2 0.797 0.783 0.769 0.756 3 0.712 0.693 0.675 0.658 4 0.636 0.613 0.592 0.572 5 0.567 0.543 0.519 0.497Capital Computer Corporation takes out a $10,000 loan to finance the purchase of new physical capital. It must repay the loan in full with interest in one year. The interest rate is 10 percent and the applicable corporate tax rate is 30 percent. What is the present value savings from the deductibility of the interest payment from Capital Computer Corporation’s taxes? Please round your answer to the nearest dollar.
- A company estimates that it will need $375,000 in 11 years to replace an important machine. If it establishes a sinking fund, by making fixed monthly payments into an account paying 8.4% compounded monthly, a) how much should each payment be? A b) How much of the $375,000 that is in the account in the end will be interest?The XYZ Co. needs an estimate of the present value of its future revenues to get a bank loan. Management expects XYZ Co, to post revenues of $250m in 4 years, $300m in 5 years, $360m in 6 years and $400m in 7 years. If the appropriate discount rate is 4% per year, what is the present value of XYZ Co.’s revenues?(Ignore income taxes in this problem.) Your Company is considering an investment proposal in which a working capital investment of $45,000 would be required. The investment would provide cash inflows of $5,000 per year for seven years. The company's discount rate is 8%. What is the investment's net present value? a- $4,115 b- $3,530 c- $7,265 d- $5,645