Explain all point of question with proper step by step Answer. 9.A bank has two, 3-year commercial loans with a presentvalue of $70 million. The first is a $30 million loan thatrequires a single payment of $37.8 million in 3 years,with no other payments until then. The second is for$40 million. It requires an annual interest payment of$3.6 million. The principal of$40 million is due in 3 years.a. What is the duration of the bank's commercial loanportfolio?b. What will happen to the value of its portfolio if thegeneral level of interest rates increased from 8% to8.5%?

Name: Explain all point of question with proper step by step Answer. 9.A b
Uploaded: 2024-03-20T06:33:21.000Z
Channel: Bartleby
Description: Explain all point of question with proper step by step Answer. 9.A bank has two, 3-year commercial loans with a presentvalue of $70 million. The first is a $30 million loan thatrequires a single payment of $37.8 million in 3 years,with no other pay

Commercial loan value = $70,000,0001st loan value = $30,000,0001st loan repayment at the end of 3…

Answered: 9. A bank has value of $7 requires a…

Business

Finance

9. A bank has value of $7 requires a with no oth $40 milliom $3.6 million $40 million a. What is portfolic b. What wi general 8.5%?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 14P

See similar textbooks

Similar questions

If Bergen Air Systems takes out a $100,000 loan, with eight equal principal payments due over the next eight years, how much will be accounted for as a current portion of a noncurrent note payable each year?
A bank makes an amortizing loan of $200,000 with a maturity of 8 years and equal payments every year. What is the principal outstanding at the end of year 6 if the interest rate is 6%? A $27,041.78 B $30,384.41 C $59,048.42 D $86,092.20
Suppose a bank offers to lend you $10,000 for 1 year on a loan contract that calls for you to make interest payments of $350.00 at the end of each quarter and then pay off the principal amount at the end of the year. What is the effective annual rate on the loan? 14.75% 13.28% 12.39% 11.21% 15.34%
A bank is offering a loan of $20,000 with an interest rate of 9%, payable with monthly payments over a 4-year period. a. Calculate the monthly payment required to repay the loan. b. This bank also charges a loan fee of 4% of the amount of the loan, payable at the time of the closing of the loan (that is, at the time the borrower receives the money). What effective interest rate is the bank charging?
4. On 1/1/21 we sell equipment and accept a 3-year note receivable for $36,500. The market value is $36,500. Payments of $13,655 include both principal and interest and are to be made annually starting on 1/1/22. The present value of the payments is $36,500. The bank would require the purchaser to pay interest of 6% in order to borrow from them. The equipment cost us $90,000 and had a book value of $40,000. Note: Be sure to show the date of each journal entry. The 'right' journal entry on the 'wrong' date is wrong. a. Prepare an amortization table b. Prepare the journal entry for 1/1/21 c. Prepare the journal entry for 12/31/21 d. Prepare the journal entry for 1/1/22 Amortization table: Journal entries: Debits Credits 1/1/21 12/31/21 1/1/22
A bank has made a 3-year $10 million dollar loan that pays annual interest of 8%. The principal is due at the end of the third year. A. The bank is willing to sell this loan with recourse at 8.5% discount rate. What should it expect for selling this loan? B. It also has the option of selling this loan without recourse at a discount rate of 8.75%. What should it expect for selling this loan? C. If the bank expects a ½% probability of default on this loan, is it better off selling this loan with or without recourse? It expects to receive no interest payments or principal if the loan is defaulted. D. Why do you think that the interest rate in part A is different from the interest rate in part B?
A 10-year $14,600,000 long-term loan from the American Bank. The loan has the following terms: a. The interest rate is 8.2%, compounded annually. The interest rate is fixed for the life of the loan and is paid at the end of each year. b. Principal is to be repaid in one lump sum at the end of 10 years. c. The bank will charge a $19,000 upfront administrative fee. d. HML will be required to move all banking activities of the company to the Canadian Bank (from the Ottawa Bank, its current financial institution.) This will cost HML $5,500 in fees, either at Canadian or Ottawa. e. HML will agree to a maximum debt to equity ratio of 2-to-1 and pay no dividends in excess of 30% of reported earnings during the life of the loan. Ratios are based on audited financial statements. f. Loan security is a second mortgage on HML’s printing facilities and personal guarantees from the principal shareholders of HML. Prepare case report outlining all alternatives/financial reporting issues
Suppose you borrow $2,000 from a bank for one year at a stated annual interest rate of 14 percent, with interest prepaid (a discounted loan). Also, assume that the bank requires you to maintain a compensating balance equal to 20 percent of the initial loan value What effective annual interest rate are yo being charged
5. A bank gives a loan to a company to purchase an equipment worth P1,000,000 at an interest rate of 18% compounded annually. This amount should be repaid in 15 yearly equal installments. Find the installment amount that the company has to pay to the bank.
A bank offers a home buyer a 25-year loan at 7% per year. If the home buyer borrows $150,000 from the bank, how much must be repaid every year? A. $15,445.90 B. $12,871.58 C. $20,594.53 D. $18,020.21
A company borrows $126,500 from a bank. The interest rate on the loan is 10 percent compounded semiannualy. The company agrees to repay the loan in equal semiannualy installments over the next 10 years. The first payment is to be made six months from now. (Use factor table in Appendix B for calculation) Required 1: What is the amount of each semiannual payment? $ Required 2: In the first payment, what is the amount of principal cancelled? $ Required 3: In the second payment, what is the amount of interest paid? $ Required 4: In the last payment, what is the amount of the last payment to cancel the loan? $ Required 5: Assume the debt contract has the option to make one extraordinary payment of up to 25% of the principal. If the company decides to exercise the right and make the extra payment together with the 18th payment, how much it must pay in dollars at the 18th payment to pay off the loan? $ Required 6: What is the amount reported in the annual audited balance sheet for…
Give typing answer with explanation and conclusion XYZ bank has issued a one year, $3 million deposit paying 7.75 percent to fund one year loan paying an interest rate of 10 percent. The principal of the loan will be paid in three installments: $1 million in four months, $1 million in 8 months and the balance at the end of the year.