17. A start-up company that makes hydraulic seals borrowed $800000 to expand its packaging and shipping facility. The contract required the company to repay the investors through an innovative mechanism called faux dividends, a series of uniform annual payments over a fixed period of time. If the company paid $250000 per year for 5 years, what was the interest rate on the loan?

17. A start-up company that makes hydraulic seals borrowed $800000 to expand its packaging and shipping facility. The contract required the company to repay the investors through an innovative mechanism called faux dividends, a series of uniform annual payments over a fixed period of time. If the company paid $250000 per year for 5 years, what was the interest rate on the loan?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 17P

See similar textbooks

Similar questions

(engineering economic) The contractor owner applied for a loan to the bank and was approved for a loan of Rp. 1 billion with 10% interest per year with a payback period of 10 years. Refunds are paid in uniform annual installments. The borrower always pays the right installments so that after the fifth year installment is paid, the bank provides an additional loan of Rp. 500 million and reduce interest to 8% per annum. a. Draw the cash flow of the loan and its repayments over 10 years b. Determine the amount of installments each year for the first 5 years and the last 5 years
Listen A trucking firm purchased two B-train trucks for $325 000. It paid 20% as a down payment and obtained a bank loan for the rest. The loan has a nominal interest rate of 12 % compounded monthly with a 50 month amortization period. The loan term is 50 months. What are the firm's monthly payments to the bank?
Data Back-Up Systems has obtained a $10,000, 90-day bank loan at an annual interest rate of 15%, payable at maturity. (Note: Assume a 365-day year.) 1.How much interest (in dollars) will the firm pay on the 90-day loan? Format: 111.11 2.Find the 90-day rate on the loan. Format: 1.11% 3.Annualize your result in part b to find the effective annual rate for this loan, assuming that it is rolled over every 90 days throughout the year under the same terms and circumstances. Format: 11.11%
RKI Instruments borrowed $4,850,000 from a private equity firm for expansion of its facility for manufacturing carbon monoxide monitors. The company repaid the loan after 1 year with a single payment of $5,300,000. What was the interest rate on the loan? The interest rate on the loan was % per year.
A trucking firm purchased two B-train trucks for $325 000. It paid 20% as a down paymentand obtained a bank loan for the rest. The loan has a nominal interest rate of 10.5% compoundedmonthly with a 10-year amortization period. The loan term is 10 years. What are the firm's monthlypayments to the bank?
Data Back-Up Systems has obtained a $10,000, 90-day bank loan at an annual interest rate of 15%, payable at maturity. Show Solutions and Explanation. (Note: Assume a 365-day year.) A. How much interest (in dollars) will the firm pay on the 90-day loan? (Format: 111.11) B. Find the 90-day rate on the loan. (Format: 1.11%) C. Annualize your result in Part B to find the effective annual rate for this loan, assuming that it is rolled over every 90 days throughout the year under the same terms and circumstances. (Format: 11.11%)
(engineering economic) An investor gets a loan from a bank of Rp. 500 million to fund new ventures to be run. The loan bears 10% compound interest annually with a five-year repayment period. The interest on the loan along with the principal loan is paid at the same time at the end of the loan period. After 3 years, the bank provides an additional loan of Rp. 300 million but increased the interest to 12% annually and changed the interest calculation based on a single interest calculation. Calculate the repayment of this loan at the end of the loan period and describe the cash flow.
Schlitz Inc. has obtained a 90-day bank loan of $10,000 with an annual interest rate of 15%, payable at maturity. Assume a 365-day year. a. How much dollar interest will the firm pay on the 90-day loan? : b. Find the 90-day interest rate on the loan
Data Back-Up Systems has obtained a $29,000, 90-day bank loan at an annual interest rate of 15%, payable at maturity. (Note: Assume a 365-day year.) a. How much interest (in dollars) will the firm pay on the 90-day loan? b. Find the 90-day rate on the loan. c. Annualize your result in part b to find the effective annual rate for this loan, assuming that it is rolled over every 90 days throughout the year under the same terms and circumstances. Answers a. The amount of interest on the loan is $___. (Round to the nearest cent.) b. The effective 90-day rate is___%. (Round to two decimal places.) c. The effective annual rate is___%. (Round to two decimal places.)
A company borrows $100,000 with interest at j₁2 = 9%. The loan is to be amortized by monthly payments of $1550 for as long as necessary. A final smaller payment will be calculated so the loan will be exactly repaid. The outstanding balance immediately after the th th 88 payment is $796.44. What is the value of the 89" and final payment? O A. $790.51 B. $796.44 C. $802.41 D. $808.43
A company received a 10-year $10 million loan commitment from a bank at a fixed rate of 6.50%. The up-front commitment fee is 30 basis points and the unused portion of the loan is charged 12 basis points. The bank borrows a total of $5 million at the beginning of the year and none thereafter. What is the net cost of borrowing the $5 million? b) Explain how a letter of credit is created in international trade and its conversion to a banker's acceptance (BA).
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