A company borrows $110000, which will be paid back to the
lender in one payment at...
A company borrows $110000, which will be paid back to the
lender in one payment at the end of 8 years. The company agrees to
pay yearly interest payments at the nominal annual rate of 7%
compounded yearly. At the same time the company sets up a sinking
fund in order to repay the loan at the end of 8 years. The sinking
fund pays interest at an annual nominal interest rate of 11%
compounded yearly. Find the total amount of the yearly payments,
that is, the sum of the interest payment and the sinking fund
payment.
Total yearly payment = $
Solutions
Expert Solution
Interest payment=Loan*rate=110000*7%
Sinking fund
payment=Loan*rate/((1+rate)^n-1)=110000*11%/((1+11%)^8-1)
Total yearly payments=Interest payment+Sinking fund
payment
=110000*7%+110000*11%/((1+11%)^8-1)
=16975.32
A company borrows $200000, which will be paid back to the lender
in one payment at the end of 8 years. The company agrees to pay
monthly interest payments at the nominal annual rate of 4%
compounded monthly. At the same time the company sets up a sinking
fund in order to repay the loan at the end of 8 years. The sinking
fund pays interest at an annual nominal interest rate of 13%
compounded monthly. Find the total amount...
A company borrows $170000, which will be paid back to the lender
in one payment at the end of 8 years. The company agrees to pay
yearly interest payments at the nominal annual rate of 11%
compounded yearly. At the same time the company sets up a sinking
fund in order to repay the loan at the end of 8 years. The sinking
fund pays interest at an annual nominal interest rate of 4%
compounded yearly. Find the total amount...
A company with a tax rate of 40% borrows $100M from lender A at
a cost of 8% and $300M from lender B at a cost of 6%. What is the
firm’s aggregate cost of borrowing (a) before taxes; and (b) after
taxes?
bob
borrows $10,000 to be paid back over 30 years with level end of
your year payments at an annual interest rate of x. The sum of
principal repayment during year five and year 10 is equal to the
amount of principle repaid during the year 15. find x
On March 3, XYZ Company borrows $10,000,000 for one year with
interest paid quarterly at LIBOR and also has a long position in an
interest rate cap with an exercise rate of 9% for a premium of
$50,000 in order to protect against rising interest rates. Given
the following term structure, determine the effective cost of
borrowing with and without the cap.
Date
Days in Period
LIBOR (%)
March 3
9
June 3
91
8
September 3
92
11
December...
A certain college graduate borrows $8,937 to buy a car. The
lender charges interest at an annual rate of 16% . Assuming that
interest is compounded continuously and that the borrower makes
payments continuously at a constant annual rate, determine the
payment rate that is required to pay off the loan in 6 years. Also
determine how much interest is paid during the 6 -year period. When
calculating the interest use the non-rounded value of the payment
rate, then round...
5) If a company borrows money from a bank, the interest paid on
this load should be reported on the statement of cash flows:
A. Operating activity
B. Investing activity
C. Financing activity
D. Noncash investing and financing activity
E. This is not reported in the statement of cash flows.
6) The appropriate section in the statement of cash flows for
reporting the purchase of land in exchange for common stock is:
A. Operating activities
B. Financing activities
C. Investing...
B
borrows $15,000 for eight years and agrees to make semiannual
payments of $1400. The lender receives 10% convertible semiannually
on the investment each year for the first six years and 8%
convertible semiannually for the last two years. The balance of
each payment is invested in a sinking fund earning 6% convertible
semiannually. Find the amount by which the sinking fund is short of
repaying the loan at the end of the eight years. (Answer:
$1,270.48.)
One year ago, your company purchased a machine used in
manufacturing for $110000. You have learned that a new machine is
available that offers many advantages; you can purchase it for $
160000 today. It will be depreciated on a straight-line basis over
ten years, after which it has no salvage value. You expect that
the new machine will contribute EBITDA (earnings before interest,
taxes, depreciation, and amortization) of $ 45000 per year for
the next ten years. The current...
Jane borrows $250,000 to be paid off on an installment basis
over fifteen years beginning one year from today. The loan payments
are annual and the interest is at 4.5% compounded annually. What is
the amount of each payment?
Select one:
a. $12,485.27
b. $23,278.44
c. $20,796.54
d. $16,666.67