A corporation has decided to use borrowed capital to finance a portion of an equipment purchase. The equipment will be partially financed byborrowing $40,000 on a 2-year contract at 7% interest compounded annually, with the loan to be repaid in two equal EOY installments. Theaverage inflation rate during this period is expected to be 2%.Determine the loan payment amount.

Loans are the debt obligations of a company that are shown on the liabilities side. These are paid…

Answered: A corporation has decided to use…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 28P

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Using the information provided, what transaction represents the best application of the present value of an annuity due of $1? A. Falcon Products leases an office building for 8 years with annual lease payments of $100,000 to be made at the beginning of each year. B. Compass, Inc., signs a note of $32,000, which requires the company to pay back the principal plus interest in four years. C. Bahwat Company plans to deposit a lump sum of $100.000 for the construction of a solar farm In 4 years. D. NYC Industries leases a car for 4 yearly annual lease payments of $12,000, where payments are made at the end of each year.
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?
An institutional lender is willing to make a loan for $1 million on an office building at a 6 percent interest (accrual) rate with payments calculated using an 4 percent pay rate and a 30-year loan term. (That is, payments are calculated as if the interest rate were 4% with monthly payments over 30 years.) After the first five years the payments are to be adjusted so that the loan can be amortized over the remaining 25-year term. Required: a. What is the initial payment? b. How much interest will accrue during the first year? c. What will the balance be after five years? d. What will the monthly payments be starting in year 6?
(1) A 10-year loan of 30,000 may be repaid under the following two methods: (a) amortization method with equal annual payments at an annual effective interest rate of 7.5%. (b) sinking fund method in which the lender receives an annual effective interest rate of 9% and the sinking fund earns an annual effective interest rate of j. Both methods require a payment of X to be made at the end of each year for 10-years. Calculate j. (2) A loan of X is repaid with level annual payments at the end of each year for 15 years. You are given: (a) The interest paid in the 1st year is 1000; and (b) the principal repaid in the 10th year is 563. Calculate X.
A 3,300,000 loan was granted to a borrower by Norayma Bank with a nominal interest rate of 12% which is paid every year end. The loan matures in 4 years on December 31, 2023. After considering the direct origination cost and origination fees, the market rate on the loan is 8%. 1,124,000 was earned as interest income for the whole term of the loan. If the origination fee was 100,000, determine the initial carrying cost of the loan. The answer is: 3,760,000 but I need the solution. Thanks
An institutional lender is willing to make a loan for $1 million on an office building at a 10 percent interest (accrual) rate with payments calculated using an 8 percent pay rate and a 30-year loan term. (That is, payments are calculated as if the interest rate were 8 percent with monthly payments over 30 years.) After the first five years the payments are to be adjusted sothat the loan can be amortized over the remaining 25-year term.a. What is the initial payment?b. How much interest will accrue during the first year?c. What will the balance be after five years?d. What will the monthly payments be starting in year 6?
.A corporation has decided to use borrowed capital to finance a portion of an equipment purchase. The equipment will be partially financed by borrowing $40,000 on a 2-year contract at 5% interest compounded annually, with the loan to be repaid in two equal EOY $21,512.20 installments. Complete the table below (inputting a similar table, with related work shown above or below, is suggested). Payment BOY EOY Year Total Interest Principal Balance Balance $40,000 $21,512.20 2 $21,512.20 Totals
Akuse Tours company secures a loan of GHS200,000 over 2 years at 10.5% compounded quarterly year to purchase more tour buses for the upcoming Christmas festivities. Requirements: a. Compute the quarterly installment the entity will be required to pay. b. Prepare a spreadsheet model indicating the installment and the loan amortization schedule.
The UNICROM company asks the bank for a loan to purchase machinery. The amount granted is $ 40,000.00 with a nominal rate of 42% per year. The company agrees with the bank to pay in 12 installments with constant amortization which are paid monthly. Calculate the value of the 3rd installment and the value of the constant amortization. a3rd installment: 4200 and Amortization: 3333 b.3rd installment: 4500 and Amortization: 3000 c.3rd installment: 4200 and Amortization: 4000 d.3rd installment: 4500 and Amortization: 3333 e3rd installment: 4383 and Amortization: 3333 With clear resolution please
ABC Inc. asked your company for a 7-year loan of $50,000. The repayment of the loan will be as follows: ABC will pay $5,000 at the end of Year 1, $10,000 at the end of Year 2, and $15,000 at the end of Year 3, and fixed unspecified cash flow (assume X) at the end of each of the following years (Year 4 through Year 7). Assuming 8% as an appropriate rate of return on low risk but an illiquid 7-year loan. Find out the cash flow that this investment must provide at the end of each of the final 4 years (year 4 to year 7), that is, find out the X?
Determine the annual payment on a OMR 500,000 and 12 percent business loan from a commercial bank that is to be amortized over a five year period.
Pasadena Healthcare has borrowed $1,000,000 on a five-year, annual payment term load at a 15 percent rate. The first payment is due one year from now. Construct the amortization schedule for this loan.

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