The Cattleman's Bank has offered the treasurer another deal, a line of credit up to $10 million with an annual interest rate of 10.5%. One covenant of the proposal is that Cattle Express must maintain a compensating balance equal to 10% of the amount of debt taken from the line of credit. Cattle Express will not have access to the compensating balance, nor earn any interest for the company. The tax rate is 40%. What is the effective cost of the line of credit? Submit %

The Cattleman's Bank has offered the treasurer another deal, a line of credit up to $10 million with an annual interest rate of 10.5%. One covenant of the proposal is that Cattle Express must maintain a compensating balance equal to 10% of the amount of debt taken from the line of credit. Cattle Express will not have access to the compensating balance, nor earn any interest for the company. The tax rate is 40%. What is the effective cost of the line of credit? Submit %

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Melvin Indecision has difficulty deciding whether to put his savings in Mystic Bank or Four Rivers Bank. Mystic offers 10% interest compounded semiannually. Four Rivers offers 8% interest compounded quarterly. Melvin has $10,000 to invest. He expects to withdraw the money at the end of 4 years.Calculate interest for each bank and identify which bank gives Melvin the better deal? (Use the Table provided.) (Do not round intermediate calculations. Round your answers to the nearest dollar amount.)
Allen plans to purchase a house in Lindfield this year, the selling price for the house is $3.8 million. Hewants to borrow 80% of the total capital from the bank using a principal and interest loan and pay 30-yearmonthly mortgage payments. CBA bank received his loan application and provided a valuation report basedon current market conditions. However, the bank valuation is conservative, stating the market value is only$3.5 million, and to lower the risk from the bank’s side, it only approves the loan with an LVR (Loan to ValueRatio) of 70% or less.Assuming that Allen wishes to borrow as much as possible from CBA bank, how much will his monthlypayments be for such a mortgage? The current interest rate from CBA is 3.19% P.A. Ignore other costs.
Coronado Corporation has elected to use the fair value option for one of its notes payable. The note was issued at an effective rate of 12% and has a carrying value of $13,000. At year - end, Coronado's borrowing rate (credit risk) has declined; the fair value of the note payable is now $14,600. (a) Determine the unrealized holding gain or loss on the note. (Enter loss using either a negative sign preceding the number e.g. -2,945 or parentheses e.g. (2,945).) Unrealized holding gain or loss $enter the unrealized holding gain or loss in dollars eTextbook and Media List of Accounts Attempts: 0 of 6 used (b) The parts of this question must be completed in order. This part will be available when you complete the part above.
Monty Inc. loans money to John Kruk Corporation in the amount of $688,000. Monty accepts an 8% note due in 7 years with interest payable semiannually. After 2 years (and receipt of interest for 2 years), Monty needs money and therefore sells the note to Chicago National Bank, which demands interest on the note of 10% compounded semiannually. What is the amount Monty will receive on the sale of the note? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Amount received on sale of note $ 637872
The Roths bought a house for $433,900. They paid the sellers a 20% down payment and obtained a simple interest amortized loan for the balance from their bank for the remainder, at 4 7/8% for thirty years. The bank in turn paid the sellers the loan amount, less a 6% sales commission paid to the sellers' and buyers' real estate agents. The bank charged them 2 points plus fees totaling $8,459.46; of these fees, $6,251.28 were included in the finance charge. (a) Find the loan amount. (b) Find the "legal loan amount" –the amount borrowed, according to the Truth in Lending Act. (Round your answer to the nearest cent.)(c) Find the Roth's monthly payment. (Round your answer to the nearest cent.)(d) Find the APR (round to the nearest hundredth of 1%).(e) Find the total interest paid. (Round your answer to the nearest cent.)(f) Find the total finance charge. (Round your answer to the nearest cent.)(g) Find the amount that the sellers are paid for their house.
Alpesh bhaliya
Max Corp. sold goods for $36,000 on July 17, 2020, and accepted a 12%, 90-day note. On August 1, the note was sold to a bank at a 15% discount rate. Required: a. Compute the proceeds. Assume a 360-day year. b. If the maker dishonored the note at maturity, prepare the entry for Max Corp. assuming $75 of bank protest fees. If an amount box does not require an entry, leave it blank.
Company A is currently cash-constrained, and must make a decision about whether to delay paying one of its suppliers, or taking out a loan. They owe the supplier $23345, and they can borrow the money from Bank A, which has offered to lend the firm $23345 for 2 month(s) at an APR (compounded) of 15%. The bank will require a (no-interest) compensating balance of 7% of the face value of the loan and will charge a $216 loan origination fee, which means Hand-to-Mouth must borrow even more than the $23345. Compute the EAR of the loan. Give typing answer with explanation and conclusion
The Roths bought a house for $438,500. They paid the sellers a 20% down payment and obtained a simple interest amortized loan for the balance from their bank for the remainder, at 0.4875 for thirty years. The bank in turn paid the sellers the loan amount, less a 6% sales commission paid to the sellers' and buyers' real estate agents. The bank charged them 2 points plus fees totaling $8,549.15; of these fees, $6,317.55 were included in the finance charge. (a) Find the loan amount (b) Find the "legal loan amount" –the amount borrowed, according to the Truth in Lending Act. (Round your answer to the nearest cent.) (c) Find the Roth's monthly payment. (Round your answer to the nearest cent.) (d) Find the APR (round to the nearest hundredth of 1%). (e) Find the total interest paid. (Round your answer to the nearest cent.) (f) Find the total finance charge. (Round your answer to the nearest cent.) (g) Find the amount that the sellers are paid for their house.

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