Q1. A business requires approximately $100,000 to purchase stock for 180 days. The transaction is financed...

Q1.

A business requires approximately $100,000 to purchase stock for 180 days. The transaction is financed via a Commercial Bill facility. The market rate is currently 6.5%pa and expected to increase to 6.7%pa for the next rollover. The Bank involved in the transaction will charge an Acceptance Fee of 2%pa.

Using a timeline show the cash inflows and cash outflows.

Expert Solution

market return 6.7%pa for =6.7*180/360 assume for 360 days in a year.

= for180 days =3.35%

same in acceptance fees2%pa=2*180/360 assume for 360 days in a year.

= for 180 days=1%

cash inflow=share purchase*return for 180 days

= $100000*(3.35/100)

=$3350

cash outflow=share purchse*acceptence fees

=$100000*(1/100)

=$1000

net cash flow =cash inflow-cash outflow

=$3350-$1000

=$2350

jeff jeffy answered 2 years ago

A T-bill that is 180 days from maturity with a face value of $100,000 is selling...

A T-bill that is 180 days from maturity with a face value of $100,000 is selling for $98,850. (A) Calculate the discount yield, bond equivalent yield, and EAR on the T-bill. (B) Calculate the discount yield, bond equivalent yield, and EAR on the T-bill if it matures in 150 days.

For a small business, they have transaction data with information about the location of purchase, and...

For a small business, they have transaction data with information about the location of purchase, and product type purchased by all customers. The business is looking to know their customer base better and potentially use this to inform their future marketing plans in other areas. What would be the general process, statistical models, and segmentation methods that could accomplish this task from this bare minimum of data provided.

Suppose your business borrows $100,000 to purchase a piece of equipment. You will be borrowing the...

Suppose your business borrows $100,000 to purchase a piece of equipment. You will be borrowing the money and repaying it over a three year period with a fixed monthly payment at an annual interest rate of 6%. Construct a loan amortization table for this loan.

Suppose you have invested $100,000 in a stock portfolio that can approximately represent the S&P 500...

Suppose you have invested $100,000 in a stock portfolio that can approximately represent the S&P 500 index. Now you think that you should invest 1⁄2 of your money in gold synthetically and the remaining would still be invested in the stock portfolio. How can you achieve this without selling a single stock from your portfolio? Explain your strategy in detail.

Q1. You plan to purchase a $100,000 house using a 30-year mortgage obtained from your local...

Q1. You plan to purchase a $100,000 house using a 30-year mortgage obtained from your local credit union. The mortgage rate offered to you is 8.25%. You will make a down payment of 20 percent of the purchase price. Calculate your monthly payments on this mortgage. Calculate the amount of interest and, separately, principal paid in the 25th payment. Calculate the amount of interest and, separately, principal paid in the 225th payment. Calculate the amount of interest paid over the...

The purchase of treasury stock ________. requires recognition on the income statement of any gain made...

The purchase of treasury stock ________. requires recognition on the income statement of any gain made on the purchase always decreases net income does not require recognition on the income statement of any gain made on the purchase requires recognition on the income statement of any loss incurred on the purchase Buzz Corporation issued $50,000 worth of 10-year, 8% bonds for $48,359.66. The 8% is the ________. stated rate market rate future rate face value The risk associated with debt...

Mr. Hansen's purchase of the stock of LifePath Fitness was done through his business. The stock...

Mr. Hansen's purchase of the stock of LifePath Fitness was done through his business. The stock investment has always been accounted for using the cost method on his firm's books. However, early in 2019 he decided to take his company public. He is preparing an IPO (initial public offering), and he needs to have the firm's financial statements audited. One of the issues to be resolved is to restate the stock investment in LifePath Fitness using the equity method since...

You are evaluating the potential purchase of a small business with no debt or preferred stock...

You are evaluating the potential purchase of a small business with no debt or preferred stock that is currently generating $41,700 of free cash flow(FCF0=$41,700).On the basis of a review of similar-risk investment opportunites, you must earn a(n) 20% rate of return on the proposed purchase. Because you are relatively uncertain about future cash flows, you decide to estimate the firm's value using several possible assumptions about the growth rate of cash flows. a. What is the firm's value if...

5. When it began business in 2026, Ajax, Inc. issued 100,000 shares of $2 par stock...

5. When it began business in 2026, Ajax, Inc. issued 100,000 shares of $2 par stock for $1,000,000. In the following year, the company repurchased 10,000 shares for $200,000. In 2028, 5,000 of the repurchased shares were resold for $160,000. In its balance sheet dated December 31, 2028, Coy, Inc.'s treasury stock account shows a balance of:

11/8: You purchase $500 of your own business´s common stock 11/11: Your business purchases paper and...

11/8: You purchase $500 of your own business´s common stock 11/11: Your business purchases paper and other office supplies for $95 (use supplies). 11/15: You start to gather some equipment to take with you when you begin your business. You have an excellent computer that is old, but works fine. You decide to start using it only for your new business. You estimate that the computer is currently worth $300, and you transfer the computer into the business in exchange...

Question