Hi expart Provide solution Boatler Used Cadillac Co. requires $810,000 in financing overthe next two years. The firm can borrow the funds for twoyears at 7 percent interest per year. Mr. Boatler decides to doforecasting and predicts that if he utilizes short-termfinancing instead, he will pay 5.25 percent interest in the firstyear and 9.55 percent interest in the second year. Assumeinterest is paid in full at the end of each year.a. Determine the total two-year interest cost under each plan.b. Which plan is less costly? Short-term variable-rate plan orLong-term fixed-rate plan?

Part (a): Determine the total two-year interest cost under each plan.Long-term fixed-rate…

Answered: Boatler Used Cadillac Co. requires…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 19P

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Boatler Used Cadillac Co. requires $870,000 in financing over the next two years. The firm can borrow the funds for two years at 9 percent interest per year. Ms. Boatler decides to do forecasting and predicts that if she utilizes short-term financing instead, she will pay 5.75 percent interest in the first year and 10.55 percent interest in the second year. Assume interest is paid in full at the end of each year. a. Determine the total two-year interest cost under each plan. Long-term fixed-rate Short-term variable-rate b. Which plan is less costly? Interest Cost O Short-term variable-rate plan O Long-term fixed-rate plan
Boatler Used Cadillac Company requires $980,000 in financing over the next two years. The firm can borrow the funds for two years at 10 percent interest per year. Ms. Boatler decides to do forecasting and predicts that if she utilizes short-term financing instead, she will pay 6.75 percent interest in the first year and 11.55 percent interest in the second year. Assume interest is paid in full at the end of each year. Determine the total two-year interest cost under each plan. Which plan is less costly? multiple choice Short-term variable-rate plan Long-term fixed-rate plan
Boatler Used Cadillac Co. requires $850,000 in financing over the next two years. The firm can borrow the funds for two years at 12 percent interest per year. Ms. Boatler decides to do forecasting and predicts that if she utilizes short-term financing instead, she will pay 7.75 percent interest in the first year and 13.55 percent interest in the second year. Assume interest is paid in full at the end of each year. What is the short term variable rate?
Boatler Used Cadillac Co. requires $850,000 in financing over the next twoyears. The firm can borrow the funds for two years at 12 percent interest peryear. Mr. Boatler decides to do forecasting and predicts that if he utilizes shortterm financing instead, he will pay 7.75 percent interest in the first year and13.55 percent interest in the second year. Determine the total two-year interestcost under each plan. Which plan is less costly?
Ben borrows a loan of $6,000 at 11% per annum on March 10. He plans to pay it different smaller amounts when he has some cash available. He manages to pay $2,500 on June 30th, and another $,2000 on September 5th. If Raymond pays the balance on November 15, how much will be his final payment. Note: from March 10 to June 30=112 days (March=31-10+1=22 + Apr=30 + May=31 + June=29 = 112 days
Mark Gore plans to get married and he wants to purchase a house for $1 800 000. He entered intoan agreement with National Housing Trust (NHT) to provide 50% financing which involvedmonthly payments over five (5) years at 12% per annum. The remainder of the funds would beborrowed from his commercial bank. Terms of the bank loan are 10% down payment with thebalance to be repaid at 20% interest over three (3) years.A. Calculate monthly payments to NHT if payments are made at the end of eachmonth. B. Compute annual end of year payments to the commercial bank. C. Considering B. above, prepare the amortisation schedule for this loan.
Avishek has an interest only loan for $100,000.00 maturing in 9 years. The interest rate on the loan is 4.750% compounded daily. He will repay the loan by making quarterly interest only payments, and by also making quarterly deposits of $2,319.62 into a sinking fund paying r(26) = 4.000%. If he defaults just after making 13 loan payments, and the lender gets the balance in the sinking fund, how much money is the lender's net loss?
Jordan was supposed to pay Courtney $4,200 6 months ago and $2,220 in 5 months. If he wants to repay this amount with two payments of $3,500 today and the balance amount in 3 months, calculate the balance amount. Assume interest is 2.40% p.a. and the agreed focal date is 3 months from now.
Miller borrows $310,000 to be paid off in three years. The loan payments are semiannual with the first payment due in six months, and interest is at 10%. What is the amount of each payment? (FV of $1, PV of $1, FVA of $1, and PVA of $1). (Use appropriate factor(s) from the tables provided.) Multiple Choice $61,075 O $77,908 $93,000 $77,092 tv A O APR 6.
Jason owes $42000 due at the end of 3 years with interest at j4 = 2.5%. In order to payoff the loan Jason decides to make deposits in a fund that earns j4 = 13%. The first deposit is $10000 at the end of 9 months and $X at the end of 27 months. Determine X using the end of 3 years as a focal date? Answer: $ Note: Do not round any intermediate calculations.
Mr. White takes a 15-year loan of $50000 to purchase an equipment for his factory. If the interest rate is 4% per quarter compunded monthly. Determine the mothly payment he has to make Determine the total payment he makes at the end of 15 years
Jesse borrowed $30,000. The company plans to set up a sinking fund that will repay the loan at the end of 8 years. Assume 12% interest rate compounded semiannually. What must his company pay into the fund each period of time?

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