Q.1 (a) You loaned a Mexican business $100,000. However, the business is repaying the loan in...

Q.1 (a) You loaned a Mexican business $100,000. However, the business is repaying the loan in Mexican pesos. The exchange rate was $1 = 100 pesos on the day of the loan but had changed to $1 = 150 pesos; what happened to the value of your investment?

(b)Calculate the retained earnings of a corporation at the end of the year if retained earnings were $20,000 at the beginning of the year, net income was $50,000, declared $60,000 in dividends, and sold $50,000 in additional stock

(c)You bought stock for a new internet company for $125 per share last year and paid a $0.50 dividend per share. Unfortunately, the company faces bankruptcy, and you quickly sell your shares for $115. Calculate your rate of return for this investment.

Expert Solution



A
		$	Mexican Pesos	Exchange Rate
	Investment	1,00,000	1,00,00,000	$1=100 Pesos
	Value of Investment	1,00,000	1,50,00,000	$1=150 pesos

		$
B	Retained Earning-Opening Balance	20,000
	Add:Net Income	50,000
	Less: Dividend	60,000
	Retained Earning-Closing Balance	10,000

C	Dividend	0.50
	Initial Share Price	125
	Dividend Yield	0.40%
	Current Share Price	115
	Capital loss	-10
	Capital loss yield	-8.00%

	Total Percentage return=Dividend yield+Capital Gain/loss yield
	Total Percentage return	-7.60%

ekkarill92 answered 2 years ago

Ian loaned his friend $25,000 to start a new business. He considers this loan to be...

Ian loaned his friend $25,000 to start a new business. He considers this loan to be an investment, and therefore requires his friend to pay him an interest rate of 9% on the loan. He also expects his friend to pay back the loan over the next four years by making annual payments at the end of each year. Ian texted and asked that you help him calculate the annual payments that he should expect to receive so that he...

A small business takes out a $100,000 loan on April 1, 2020. The loan interest rate...

A small business takes out a $100,000 loan on April 1, 2020. The loan interest rate is j4 = 6%. They are to repay the loan with quarterly payments of $4,000 for 5 years (first payment on July 1, 2020), followed by n quarterly payments of 5,000 for as long as necessary. Determine the total number of loan payments made and both the amount and calendar date of the smaller final payment made one quarter after the last 5,000 payment.

You have just started your business. However, you now require a cash infusion of $100,000. Do...

You have just started your business. However, you now require a cash infusion of $100,000. Do you secure debt or equity financing? Why?

You are a loan officer at a bank. Two years ago your bank loaned Westwood Solar...

You are a loan officer at a bank. Two years ago your bank loaned Westwood Solar $100,000 to start a company selling solar panels to commercial and residential customers. The loan has an acceleration clause that permits the bank to immediately demand all payments plus the interest owed to date if Westwood Solar fails to pay an installment in any given month. Westwood Solar has made its loan payments for the past two years. However, you know that the company...

You are loaned $100,000 and pay this back by making constant payments at the end of each year for 40 years.

You are loaned $100,000 and pay this back by making constant payments at the end of each year for 40 years. If effective annual interest is i = 3% then find when the outstanding balance first falls below $50,000.

You receive an inheritance of $100,000. However the terms of the bequest specify that you cannot...

You receive an inheritance of $100,000. However the terms of the bequest specify that you cannot take possession of the cash until the sum has grown to $250,000. The money is being held in trust for you in an account that is currently paying 10%, compounded quarterly. The bank where the account is held guarantees the rate is fixed for the first five years, but thereafter may increase, but will not decrease. If the interest rate increases, the increase will not be more...

You need $100,000 to start your own business. Consider the following loan contracts. All your payments...

You need $100,000 to start your own business. Consider the following loan contracts. All your payments are made at the end of each month for 10 years to pay off the loan Bank A: 12% APR with 3 points Bank B: 12.3% APR with 1 point Which bank would you choose? Bank A: Bank B: All work must be shown to get correct Unfortunately that is all the info given

you borrowed 100,000 exactly 5 years ago. the loan is structured as an amortized loan. the...

you borrowed 100,000 exactly 5 years ago. the loan is structured as an amortized loan. the interest rate is 6 % and you make quarterly (end of quarter) payments of 1937.06. the loan is amortized over 25 years. how much principal have you paid over the first 5 years ?

Your grandfather left an inheritance for you of $100,000. However, you can only drawdown on the...

Your grandfather left an inheritance for you of $100,000. However, you can only drawdown on the investment as follows: Years 1 – 3 -- $15,000 each year Year 4 to 6 -- $10,000 each year Year 7 -- $25,000 Interest on the fund is 5%. a) What is the present worth of this inheritance? b) Due to high liquidity interest rates have dropped to 4%. What will be the impact on the present worth of this inheritance as a consequence...

6. Your grandfather left an inheritance for you of $100,000. However you can only drawdown on...

6. Your grandfather left an inheritance for you of $100,000. However you can only drawdown on the investment as follows: Years 1 – 3 $15,000 each year Year 4 to 6 $10,000 each year Year 7 $25,000 Interest on the fund is 5%. a) What is the present worth of this inheritance? b) Due to high liquidity interest rate have dropped to 4%. What will be the impact on the present worth of this inheritance as a consequence of the...

Question