Explain the determinants of credit olicy variables. 2. Explain the hotives for the extension of the rade credit.

Q: c) Does every loan, which consists of an initial outlay followed by a sequence of re- ceipts, have a…

A: A loan can be defined as the financial support received from the lender by the borrower. In…

Q: o calculate the Internal Rate of Return, you need to know what interest rate to start with. True or…

A: Internal rate of return (IRR) is the rate at which NPV is zero

Q: Define mezzanine loan?

A: Mezzanine funding: Mezzanine funding is a type of funding that has together the characteristics of…

Q: What is WACC and why would that be used as the discount rate?

A: WACC stands for Weighted Average Cost of Capital. It is a calculation of a firm's cost of capital in…

Q: explain the application of compounding measures: effective or nominal / interest or discount rates,…

A: The sum that the lender demands from the borrower in addition to the principal amount is known as…

Q: Define increase or decrease of credits.

A: Definition:   Account: Account is the basic record that reports all changes in the value of…

Q: What is the Effect of Loan-to-Value Ratio on Loan Cost?

A: LTV ratio tells about the maximum loan approved in terms of the value of the collateral given.

Q: Calulate the effective interest rate.

A: Here, Value of Note is $29,059 Simple Interest Rate is 8% Time Duration of Note is 12 months

Q: The discount rate is the combination of what two types of discounting?   a. exponential and linear…

A: Discount rates are used for discounting the future cash flows. It helps in determining the time…

Q: Describe in detail the Stochastic Discount Factor (SDF)and its components.

A: Stochastic discount factor is defined as the concept, which has the combination of the financial…

Q: Develop various interest formulas for the credit calculations?

A: The interest on interest computation figures the formula of compound interest on the loaned or…

Q: What are some possible financial decisions in which using the Rate formula might be helpful

A: An interest rate, denoted r, is a rate of return that reflects the relationship between differently…

Q: The modified internal rate of return (MMIR) is the discount rate that forces the _____.

A: Explanation: Modified internal rate of return can be better understood from the below formula, where…

Q: Compute and interpretfinancial ratios that would beuseful to a long-term creditor.

A:

Q: How can we determine the borrowing rate of return?

A: The borrowing rate of return is the return that is charged on the borrowings made by the firms or…

Q: Explain mezzanine loan?

A: Mezzanine financing is a blend of both debt and equity financing. It is a way for firms to raise…

Q: Distinguish between the initial rate of interest and the expected yield on an ARM. What is the…

A: Introduction: The adjustable rate mortgage is one of the method used to calculate the interest rate…

Q: How can fi nancial statement analysis be used to evaluate the credit quality of a potentialfi…

A: Whenever, an investor is considering an investment proposal, he need to analyze the various things…

Measuring Your Credit Capacity

Credit capacity means determining one’s ability to manage credit. The credit capacity of the individual or an organization is measured based on the details of the earnings, expenses, and previous debts. Credit capacity valuation is crucially required in obtaining huge debt obligations from a lender such as housing loans, car loans, and business loans.