You are the CFO of a publicly traded corporation, and as a
part of your responsibilities you arrange loans for various short
term and long term funding requirements. The investment bank who
provides those loans has submitted to you a list of terms.
(Please show work on this problem, posted this work twice and
two experts gave different anssers. If you answer the same as one
of the other experts I will know that this answer will be the right
one. Pleade show your work***)
Pleade show your work*** You are requesting a $8,000,000 loan
with a term of 4 months for short term financing needs, payroll,
Christmas bonuses to employees, accounts payable, etc., the
investment bank will require your firm to repay $8,110,000 at the
end of those four months. What is the APR and EAR?
Pleade show your work*** You had also requested terms for a 7
year loan for the purpose of purchasing new machinery and
equipment. For $19,000,000 today, the investment bank requires
$23,550,000 at the end of seven years. What is the interest
rate?
Pleade show your work*** The CEO is also considering building
a new factory, and he has asked you to inquire about the rate on a
$32,000,000 loan for 30 years. The bank has informed you that for
$32,000,000 now, your firm would need to repay the $32,000,000 at
the end of 30 years, but also make an annual interest payment of
$1,600,000 each year. What is the interest rate?
Please sketch the graph or just place an outline of what it
looks like**** Sketch a graph of the yield curve which your company
faces for their costs of borrowing.