Investor B sold a put option and bought a call option when the stock price is $30. The strikeprice for both options is $35. Premiums on call and put is $3.55 and $4.05 respectively. Atthe time of maturity, the stock is trading at $48. How much B earned as profit?a) $5.40b) $17.50c) $18.50d) $13.50

With the use of mortgage calculator, the calculation of equal yearly payments is as under: Loan…

An engineer borrowed $3000 from the bank, payable in six equal end-of-year payments at 8%. The bank agreed to reduce the interest on the loan if interest rates declined in the United States before the loan was fully repaid. At the end of 3 years, at the time of the third payment, the bank agreed to reduce the interest rate from 8% to 7% on the remaining debt. What was the amount of the equal annual end-of-year payments for each of the first 3 years? What was the amount of the equal annual end-of-year payments for each of the last 3 years?

An engineer borrowed $3000 from the bank, payable in six equal end-of-year payments at 8%. The bank agreed to reduce the interest on the loan if interest rates declined in the United States before the loan was fully repaid. At the end of 3 years, at the time of the third payment, the bank agreed to reduce the interest rate from 8% to 7% on the remaining debt. What was the amount of the equal annual end-of-year payments for each of the first 3 years? What was the amount of the equal annual end-of-year payments for each of the last 3 years?

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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Falco Inc. financed the purchase of a machine with a loan at 3.50% compounded semi-annually. This loan will be settled by making payments of $9,100 at the end of every six months for 8 years. a. What was the principal balance of the loan? b. What was the total amount of interest charged?
On 1 April 2020, Apollo Berhad made a RM1,000,000 loan from the bank at an interest rate of10 percent, equal to its effective interest rate for the development of the company's power generation facilities. On 1 April, the loan was obtained and RM300,000 was used on qualifying properties. On 1 April, the company deposited the remaining balance at a rate of 6% per annum in a bank yielding interest.On 31 December 2020, when the construction was finished and ready for use, the full amount was withdrawn and paid to the contractor. On 31 March 2021, the company returned the loan to the bank. As of 1 April 2021, power generation facilities were eligible for use in the undertaking. Requirement : (a) Calculate the net borrowing cost that should be capitalised as part of the cost of the new store and the finance cost that should be reported in the income statement for the year ended 31 March 2021. (b) Show the extracts from the income statement for the year ended 31 March 2021 and the statement…
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 7% interest compounded annually, with the loan to be repaid in two equal EOY installments. The average inflation rate during this period is expected to be 2%. Determine the loan payment amount.
17. Bremen Company borrows $350,000 to be repaid in equal installments over a period of eight years. The loan payments are semiannual with the first payment due in six months, and interest is at 6%. What is the amount of each payment?
Grecian Tile Manufacturing of Athens, Georgia, borrows $1,500,000 at LIBOR plus a lending margin of 1.39 percent per annum on a six-month rollover basis from a London bank. If six-month LIBOR is 5.20 percent over the first six-month interval and 5.445 percent over the second six-month interval, how much will Grecian Tile pay in interest over the first year of its Eurodollar loan? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Interest
To travel to America via the ship Titanic, Juana made a P100,000 loan which is to be paid over a term of 2 years at 7.2% interest convertible quarterly. The lender wants only payments of interest until the end of the term when the loan balance P100,000 must be repaid in full. The borrower will make level quarter-end payments to a sinking fund earning 6% payable quarterly. 1.) Calculate the sinking fund Balance immediately after the 6th payment is made.
General Computers Inc. purchased a computer server for $70,000. It paid 35.00% of the value as a down payment and received a loan for the balance at 4.50% compounded semi-annually. It made payments of $2,850.75 at the end of every quarter to settle the loan. a. How many payments are required to settle the loan? payments Round up to the next payment b. Fill in the partial amortization schedule for the loan, rounding your answers to two Question 3 of 7 b. Fill in the partial amortization schedule for the loan, rounding your answers to two decimal places. Payment Number 0 1 2 Payment Interest Portion Principal Portion Principal Balance $45,500.00 11
1. Use the United States Rule to solve the following: On Jan 12, a company borrowed $150,000 at 10% interest compounded annually for 220 days. However, on July 8, they made a payment of $25,000. If no additional payments are made, find the amount due at maturity of the loan.
a) A bank made a 4-year 12% amortizing $2,500,000 loan with equal payments. What is the amount of interest and principal paid at the end of the 3rd year? What is the balance on the loan at the end of the 3rd year? b) Assume instead the bank demands that the borrower pay interest only for the first two years and then principal payments of $1,250,000 in years 3 and 4. What is the amount of interest and principal paid at the end of the 3rd year? What is the balance on the loan at the end of the 3rd year? Assume the same 12% rate of interest. For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac).
A person borrowed an amount of one million dinars from a bank with compound interest, the annual rate of which is 10%, and it was agreed between the debtor and the creditor to pay the loan and the interest together in 3 equal installments, so that the installment would be paid at the end of each year. What is required is: a. Find the amount of the equal installment. B . Illustrate the appropriate depreciation schedule.
Company is contemplating factoring its accounts receivable. The factor will acquire P250,000 of the company’s accounts receivable every 2 months. An advance of 75 percent is given by the factor on receivables at an annual charge of 18 percent. There is a 2 percent factor fee associated with receivables purchased. What is the cost of the factoring arrangement? choose the letter of the correct answera. P30,000.00b. P33,750.00c. P63,750.00d. P103,000.00e. P125,000.00
A nurse borrowed P100, 000 to pay for the processing fee of her papers to work in the US. She borrowed from a financing company charging 10% compounded quarterly. The loan is to be amortized by quarterly payments for a term of one year. 1) How much is the quarterly payment? 2) Construct an amortization schedule for this loan

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