Company A wants to expand its productive capacity and borrow $1.3 million for 20 years at 5.6%, compounded four times a year. After 16 quarterly payments of $26,235, the company wants to refinance its loan for 15 years at 4.9%, compounded quarterly. There is a one time refinance charge of $6000, added to the amount of the new, refinanced loan.

Q: Lush Gardens Co. bought a new truck for $68,000. It paid $6,800 of this amount as a down payment and…

A: Here, Particulars Values Price of new truck  $ 68,000.00 Down payment  $6,800.00 Loan…

Q: AC Inc. borrows $250,000 to finance an expansion. The loan agreementrequires equal payment= every…

A: Loan is a contract between lender and borrower where lender provide funds to borrower for definite…

Q: A $15,000 loan with interest being charged at 10% compounded quarterly was made 2.5 years ago and is…

A: Loans are financial arrangements where a lender provides funds to a borrower, typically with the…

Q: A company will need $65,000 in 6 years for a new addition. To meet this goal, the company deposits…

A: Solution: When an amount is invested somewhere, it earns interest on it. The amount initially…

Q: SH Enterprises needs to borrow to finance a project. No payments are to be made during the…

A: The periodic payment is made to repay a loan or debt. The periodic payment may be made at the end of…

Q: Lush Gardens Co. bought a new truck for $54,000. It paid $5,400 of this amount as a down payment and…

A: When the borrower borrows a loan from the lender, he has to pay a rate of interest on the borrowed…

Q: Loan Rp. 1,000,000,000 is subject to 15% annual interest and must be returned in uniform annual…

A: Given: Initial Loan amount = 1,000,000,000 Annual interest rate = 15% Number of years = 10 Since,…

Q: A company borrows $2,000,000 at 12% interest per year. If the company repays the loan in full in one…

A: Interest means the extra amount which we received because of investment made and will be paid in…

Q: Determine the maturity value of P3,000 invested at 9.5% compounded semiannually for 3 ½ years.

A: Data given: P=Principal = P 3,000 r=Rate= 9.5% compounded semi-annually = 9.5%/2 = 4.75% t=Time= 3.5…

Q: A $200,000 loan amortized over 15 years at an interest rate of 10% per year requires payments of…

A: Given, Loan Amount = $200,000 Time Period = 15 Years  Rate = 10%

Q: a. Compute the ATCF for the 5-year period using the tabular method (Show YEAR, BTCF, DEPRECIATION,…

A: Depreciation represents the estimated reduction in value of a fixed means within a financial time.It…

Q: (10 Marks) A trucking firm purchased two B-train trucks for $325 000. It paid 20% as a down payment…

A: Calculate the present value of the loan taken in order to purchase the trucks by multiplying the…

Q: Listen A trucking firm purchased two B-train trucks for $325 000. It paid 20% as a down payment and…

A: The actual cost of two B-train trucks is $325,000 and the down payment is 20% of the actual cost.The…

Q: To finance the development of a new product, a company borrowed $29,000 at 7% compounded monthly. If…

A: Compound Interest The type of interest that helps build wealth quickly is called compounding.…

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A: Interest is compensation to funds bearer for time factor of money. Effective Interest or EAR shows…

Q: 9. Refinancing: Company A wants to expand its productive capacity and borrow $1.3 million for 20…

A: Here, Borrowed Amount is $1,300,000 Quarterly Payments is $26,235 Interest rate is 5.6% Duration of…

Q: In order to purchase another truck, Beatty Transport recently obtained a $125,000 loan for five…

A: Given Information:Loan amount is $125,000 Number of years is 5 Interest rate is 7.8% (semi-annual)

Q: company makes payments of $1,600 at the end of every month, how long will it take to settle the…

A: Loan: It is the amount of credit taken by the borrower for a period from the lender. The lender…

Q: If you invest $1000 (the principal) at a 6% annual rate for three year, how much interest you are…

A: The Effective Annual Interest Rate (EAR), also known as the Annual Equivalent Rate (AER), is a…

Q: 6. Holcim Cement plans to buy equipment that costs $560,000 to expand its production in 6 years. If…

A: There is need of planning for the future and if done on time with proper planning than it will have…

Q: A wind energy turbine prop plant is expanding and takes out a loan for $450,000 to be paid back over…

A: Loan installment is that amount which is paid by the borrower to his lender for fixed period of time…

Q: Lush Gardens Co. bought a new truck for $50,000. It paid $5,500 of this amount as a down payment and…

A: When the borrower borrows a loan from the borrower, he has to pay a rate of interest on the borrowed…

Q: wed $300,000.  The loan will to be repaid over the next three years with six semiannual payments,…

A: The semiannual payment plan seeks to provide more manageable and predictable cash flow for both…

Q: A $500,000 corporate loan is supposed to be repaid over 10 years in the amount of $15,227.80 at the…

A: The question explains that loan refinancing at the cheaper interest rate will reduce the regular…

Q: A company estimates that it will need $375,000 in 11 years to replace an important machine. If it…

A: We need to use future value of annuity formula to calculate payment size  PMT =FVn(1+i)n -1i Where…

Q: A loan of 15,000 is repaid by annual payments of principal starting one year after the loan is made,…

A: Present value is a financial concept that represents the current worth of a future sum of money or…

Q: RD Inc. projects the following quarterly expenses over a 2-year period of time beginning 3 years and…

A: N = Number of quarterly expense periods = 8 Time period after which quarterly expense starts = 3…

Q: A company will need $70,000 in 6 years for a new addition. To meet this goal, the company deposits…

A: Amount needed or accumulated amount (FV) = $70,000 Quarterly interest rate (r) = 0.0275 (i.e. 0.11 /…

Q: 6. Contracting company plans to update its equipment so that its trucks are replaced after five…

A: As per the concept of time value of money the worth of money changes with passage of time because…

Q: An open loan of $17,000 was taken out today where payments (deposits) and withdrawals can be made…

A: Compound interest is a financial concept in which interest is calculated not only on the principal…

Q: Extra #4. A $10,000 loan will be repaid by 30 level annual payments at the end of each year. The…

A: We can prepare an amortization chart for a period of 30 years and identify when the interest payment…

Q: Your boss has asked you to evaluate the economic viability of refinancing a loan on your plant’s…

A: NPV is the net current worth of cash flows that are expected to occur in the future.

Q: A firm is borrowing $1 million to expand its operations. The annual interest on the loan is 13% and…

A: Quarterly loan installment can be calculated using the following formula.   Periodic Payment = P x R…

Q: A construction company borrowed money at 10% per year interest to purchase new heavy equipment nee

A: All sorts of future cash flows in respect of adding interest on present value are known as future…

Q: The optical products division of Panasonic is planning a $3.5 million building expansion for…

A: The uniform amount per month is the equal amount of cash flow that will be paid/received each month.…

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.