Exercise I.The bank has granted an overdraft facility to ABC company for the period. Theoverdraft facility amount is USD 3700000. The interest rate on the overdraft facilitytaken is 15% per annum, and the overdraft facility commission is set at 3% and is tobe paid in advance. It is anticipated that within the first period (i.e. 140 days), thecompany will benefit from USD 985000 of the overdraft facility granted, and within thenext 130 days from USD 785000 of the overdraft facility granted. Calculate the effectiveannual cost of using the overdraft facility by the company.

Total overdraft facility = $3,700,000Interest rate = 15% per annumCommission =3%First period (140…

Answered: Exercise I. The bank has granted an…

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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The highway department expects the maintenance cost for a piece of heavy construction equipment to be 5,000 Ghana cedis in a year 1, 5500 in year 2 and to increase by 10%annually through year 10. At an interest rate of 15% per year, show up he cash flow diagram for the maintenance programme and determine the present worth of 10 years of maintenance costs
please answer very quickly
A firm sells the same material with two separate payment plans.1. According to the 1st payment plan, the payment period is 12 months, each monthly payment is 10 837 000 dollars, and an interim payment of 12 million dollars is required at the end of the 6th month.2. In the 2nd payment plan, the payment period is 18 months, each monthly payment is 7 965 000 dollars and an interim payment of 36 million dollars is required at the end of the 12th month. Annual nominal interest rate for both options is 60%. Which payment plan would you recommend? In payments, discrete compound interest is applied.
A company is considering an iron ore extraction project that requires an initial investment of $1,200,000 and will yield annual cash inflows of $534,283 for three years. The company's discount rate is 9%. Calculate IRR. Present value of ordinary annuity of $1: 10% 12% 14% 15% 16% 18% 20% 1 0.909 0.893 0.877 0.870 0.862 0.847 0.833 1.736 1.690 1.647 1.626 1.605 1.566 1.528 3 2.487 2.402 2.322 2.283 2.246 2.174 2.106 4 3.170 3.037 2.914 2.855 2.798 2.690 2.589 OA. 16% OB. 15% D OC. 14% O OD. 18%
(a) To upgrade its vehicles, the project Insignia is considering undertaking, the company is exploring the option of obtaining the $10,000,000 required via a loan from its bank for a term of 4 years, at an interest rate of 12% per annum. Monthly payments are expected to be made on the loan. Required: i. Calculate Insignia Corp.'s monthly payment on this loan. ii. Prepare the company's Amortization Schedule for the first three (3) months of this loan, clearly showing the interest and principal payments.
Bowl Corporation has obtained a line of credit facility of $1 million from Plate Bank at 6% interest per annum to meet its $900,000 capital requirement. The capital is needed by Bowl Corporation for 100 days. The bank requires a 2% commitment fee and $50,000 compensating balance. Compute the amount of interest that has to be paid by Bowl Corporation to the bank for the line of credit.
£6000 is deposited at a nominal rate of interest of 3.5% per annum, calculate the number of years that deposit has been doubled if interest is compound (i) semiannually, (ii) monthly, and (iii) continuously. (keep two decimal places)(b) The net cash flow for a project is given as follows: Year 0 1 2 3 4 Project A -10,000 -3,000 4,000 6,000 8,000 Calculate the IRR. State the conditions for this project to be profitable.
Q1. A machine costs the company K98,000 and its effective life is estimated to be 12 years. If the scrap realizes K3,000 only, what amount should be retained out of profits at the end of each year to accumulate at compound interest at 5% per annum? Q2. A mortgage of K200,000 is to be repaid over a 25 year period at a fixed interest rate of 4.5 %. Calculate the monthly repayments.
Cross Ltd has bought an asset with a life span of 4 years. At the end of the 4 years, replacement of the asset will cost GH¢12,000. In this direction, the company has decided to provide for the future commitment by setting up a sinking fund account into which equal annual investment will be made at the end of each year. Interest rate on the investment will be 12% per annum. Required:i. Calculate the annual instalmentsii. Draw up the sinking fund schedule to show the growth fundiii. Assuming the first payments will be made now and 12 months thereafter, what are the annualpayments? You are required to draw up the sinking fund schedule .
A construction company plans to open an account for a major future equipment purchase. The plan is to make uniform annual deposits for the next 20 years in the account which is expected to earn a nominal interest rate of 6% per year compounded monthly. If the target is to have $4,000,000 at the end of the 20 years, how much should each deposit be? OA. $348,800 OB. $108,800 OC. $353,600 OD. $106,800
Answer ASAP please write the formula used please.
Cullumber Inc. is planning to expand operations into South America in 8 years. The first three years, Cullumber will spend on feasibility and marketing studies. Once those studies are complete, Cullumber plans to invest $198000 per year for the remaining five years. What amount will Cullumber have at the end of the eight-year period for the expansion assuming a 11% interest rate? ○ $1431104 $990000 ○ $2348167 ○ $1233104

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