General Electric (GE) issues $97.44 million in commercial paper with 113 days until maturity and a yield of 4.60%. How much money does it borrow? Note: Answer in millions of dollars, round to the nearest two decimal places

General Electric (GE) issues $97.44 million in commercial paper with 113 days until maturity and a yield of 4.60%. How much money does it borrow? Note: Answer in millions of dollars, round to the nearest two decimal places

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

See similar textbooks

Related questions

Q: 26. INTERNATIONAL FINANCE A Malaysian electric company requires proceeds of $720,000 (local cur-…

A: Annual effective rate: It is the rate whose compounding is annually.

Q: Suppose that Bank A pays 1.89% interest compounded quarterly on a 5-year CD, while Bank B pays 1.88%…

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

Q: Average trade collections and disbursement are P72,000,000 and P57,600,000 per year. It takes a…

A: Float in banking occurs when there is a time difference between the checks deposited and checks…

Q: O 14.26% 10 20% Nocci O 1120%

A: In grating loans bank require some balance to be maintained in bank so actual loan in hand is much…

Q: Lever Age pays an 10% rate of interest on $10.20 million of outstanding debt with face value $10.2…

A: Rate of interest = 10%Debt = $ 10.20 millionEBIT = $1.2 millionInterest = 10%* $ 10.20 million =…

Q: 8 Brampton Truck Parts needs $652,000 to take a cash discount of 2.50/10, net 70. A banker will loan…

A: 1. Loan Amount Needed: $652,0002. Cash Discount: 2.50%3. Discount Period: 10 days4. Credit Terms:…

Q: 1) Wontaby Ltd. is extending its credit terms from 45 to 60 days. Sales are expected to increase…

A: Question OneBecause of increase in the credit terms, company's accounts receivables increases where…

Q: ANZ Bank lends $140, 000 to a customer for 7 years at a rate of 13.75% with monthly repayments. [All…

A: Installment is the periodic amount paid by the borrower to the lender in order to pay back the loan…

Q: Grecian Tile Manufacturing of Athens, Georgia, borrows $1,500,000 at six-month CME Term SOFR plus a…

A: Eurodollar Loan:A loan denominated in US dollars but borrowed from a bank outside the United States…

Q: A bank is paying 7.5% APR on a CD. (Note: The convention when there are no periodic payments is to…

A: Present value is the estimation of the current value of future cash value which is likely to be…

Q: Automotive Excellence Inc. borrowed $16,000.00 on April 16 with an interest rate of 4.9% per annum.…

A: An interest rate is the cost of borrowing money or the return on investment for lending money,…

Q: Your company is borrowing $5,800,000 in the form of notes payable from a bank. The bank is…

A: Net Yield = Interest rate * ( 1 - Tax Rate ) Interest rate is the rate charged by bank.

Q: establish a "rainy day" cash reserve account, a certain company deposits $11,000 of its profit at…

A: Quarterly deposit are of $11,000 Interest rate is 1.85% Compounded quarterly To Find: Value of…

Q: The company is planning to purchase a new office building and will need to borrow $750,000. The loan…

A: Present Value (PV) of borrowing = $750,000Monthly Interest rate (r) = 7% / 12 = 0.583333% or…

Q: 2. Mala-Inse Company needs P5,000,000 short-term credit for 90 days. To produce the amount, the…

A: Financing cost: It refers to the cost of raising funds for the business including flotation costs,…

Q: Assume that a firm has a $1,000,000 line of credit at an 4.94 percent rate of interest that requires…

Q: 7. The CFO has negotiated a cheaper deal with mCommerceBank, a competitior of eCommerceBanque. The…

A: When we take a loan we have to make periodic payments towards servicing that loan. The payments can…

Q: A debt pf $42,000 is repaid by payments of $3,872 made at the end of every six months. Interest is…

A: The periodic payment is made to repay the loan. The periodic payment includes both the interest and…

Q: Cost of commercial paper Better Effort Corporation sold an issue of 106-day commercial paper with a…

A: Commercial Paper = 106Face Value = $1.3millionProceeds = $1285230Period = 365

Q: A bank is paying 7.5 % APR on a CD. (Note: The convention when there are no periodic payments is to…

A: Future value refers to the estimated value of an investment or cash flow at a specified point in the…

Q: A radio commercial for a loan company states: "You only pay 28¢ a day for each $500 borrowed." If…

A: Loan period = 242 daysAmount borrowed = $2,370Daily payment = 28 cents

Q: A bank lends some money to a business. The business will pay the bank a single payment of $180,000…

A: The present value function can be used to derive the present value of a future sum or the present…

Q: Wontaby Ltd. is extending its credit terms from 30 to 45 days. Sales are expected to increase from…

A: The additional financial requirement will be multiplied by the cost of acquiring additional funds…

Q: On July 1, 2020 Trolley & Train World borrowed money from First Friendly National Bank by issuing a…

A: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: $2350 was borrowed 4-years ago, is to be settled by following payments: $1175 today, $1030 in…

A: The objective of the question is to find out the balance of the loan before the following payments…

Q: On January 1, the Hudson Company borrowed $190,000 to purchase machinery and agreed to pay 10%…

A: 1. Calculate the interest for the first year:The interest for the first year is calculated…

Q: Based on the optimal interest rate and the estimate for loan losses what will charge on its…

A: Commercial loans are credit facilities that are provided to businesses or financial institutions…

Q: If you purchase $27,000 in U.S. Treasury Bills with a discount rate of 4.2% for a period of 26…

A: Data given: P=Principal amount=$27000 r=Discount rate=4.2%=0.042 t=Time=26 weeks=26/52=0.5 Formula:…

Q: þalagang Pilipina Company needs P5,000,000 short-term credit for 90 days. To produce the amount, the…

A: The question is based on the concept of discounting and the issue of commercial paper(CP) for short…

Q: An Engineering firm deposits Kshs.1,000,000 into a bank that pays an interest of 5% per annum…

A: Future value = Present value * (1 + Interest rate)^number of years

Q: $2350 was borrowed 4-years ago, is to be settled by following payments: $1175 today, $1030 in…

A: To solve this question, we need to calculate the balance of the loan at different points in time,…

Q: Kyoto Joe, Inc., sells earnings forecasts for Japanese securities. Its credit terms are 2/15, net…

A: Discount terms = 2/15 net 90Percent of customers taking discount = 80%Monthly forecasts sold =…

Q: Given an annual credit sales value of 365 million; accounts receivable beg. 36.5 million, cost of…

A: Ratio analysis is a tool that establishes a relationship between the different items. It is used to…

Q: A radio commercial for a loan company states: "You only pay 29g a day for each $500 borrowed." If…

A: Its is given that The customer pays 29c or $0.29for each $500 borrowed , Therefore for $1 the…

Q: Wontaby Ltd. is extending its credit terms from 45 to 60 days. Sales are expected to increase from…

A: When a firm extends credit, sales increase. It also increases the receivables. To finance…

Q: Black Panther Inc. buys on terms of 2/15, net 60 days. It does not take discounts, and it typically…

A: Net purchases = P450,000 Terms of credit = 2/15,net 60 days

Q: Assume that a firm issues $500,000,000 of U.S. commercial papers (and therefore uses a 360-day year…

A: Commercial paper is short-term debt securities issued by businesses to raise capital. It has a fixed…

Q: The Continental Bank advertises capital savings at 6.1% compounded annually while TD Canada Trust…

A: Solution:- When an amount is invested somewhere, it earns interest on it. Effective Annual Rate…

Q: Interest

A: We can determine the interest paid using the formula below:

Q: Suppose a bank makes a two-year $20,000 loan with the entire principal amount due in two years at an…

A: Static Gap = Rate sensitive assets - Rate sensitive liabilities.

Q: A 90-day bank bill with a face value $100,000 was purchased with a yield of 4.00%. If it is sold…

Concept explainers

Effective Interest Rate

The term interest rate can be defined as the amount that is charged by the lender as a percentage on the principal amount. Interest rate which is charged annually is known as annual percentage rate.

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Explanation of commercial paper

VIEW

Step 2: Calculation of the amount borrowed

VIEW

Solution

VIEW

Step by step

Solved in 3 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Annual credit sales of Nadak Co. total $680 million. The firm gives a 2% cash discount for payment within 10 days of the invoice date: 90% of Nadak's accounts receivable are paid within the discount period. Required: a. What is the total amount of cash discounts allowed in a year? (Enter your answer in millions rounded to 2 decimal places.) Total amount million b. Calculate the approximate annual rate of return on Investment that Nadak Co's cash discount terms represent to customers who take the discount. (Assume a credit period of 30 days and 360-days year). (Round intermediate calculations to nearest whole percentage.) ROI
A radio commercial for a loan company states: "You only pay 36¢ a day for each $500 borrowed." If you borrow $2,710 for 162 days, what amount will you repay, and what annual interest rate is the company actually charging? (Assume a 360-day year.) a. Amount you repay=$(Round to two decimal places.) ID
Aggarwal Inc. buys on terms of 1/10, net 20, and it always pays on the 20th day. The CFO calculates that the average amount of costly trade credit carried is $750,000. What is the firm's average accounts payable balance? Assume a 365-day year. a. $1,000,000 b. $1,492,500 c. $1,500,000 d. $1,125,000 e. $1,113,750
If $5,000 is borrowed today and $8,955 is paid back in 9 years, what interest rate compounded annually has been earned? 7 % Round entry to one decimal place. Tolerance is ±0.2.
Canadian Western Bank issued a loan of $59,000 at 4.33% compounded semi- annually. The loan was repaid by payments of $730 at the end of every month. a. How many payments were required to pay off the loan? (Enter a whole number) b. What was the total interest paid in the 4th year? (Enter starting and ending periods as P1 and P2 and the total interest paid as a positive value to the nearest cent.) P1 = P2= = Total interest paid in the 4th year = $ c. What was the size of the final payment? (Enter a positive value to the nearest cent) $
Given Principal $13,500, Interest Rate 9%, Time 240 days (use ordinary interest) Partial payments: On 100th day, $3,800; On 180th day, $2,500 a. Use the U.S. Rule to solve for total interest cost. Note: Use 360 days a year. Do not round intermediate calculations. Round your answer to the nearest cent. Total interest cost c b. Use the U.S. Rule to solve for balances. Note: Use 360 days a year. Do not round intermediate calculations. Round your answers to the nearest cent. Balance after the payment Final payment On 100th day On 180th day c. Use the U.S. Rule to solve for final payment. Note: Use 360 days a year. Do not round intermediate calculations. Round your answer to the nearest cent.
First American Bank charges 10.8 percent compounded monthly on its business loans. First Fifth Bank charges 11 percent compounded semiannually. Calculate the EAR for each bank. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) f3 First National Bank First United Bank % % As a potential borrower, which bank would you go to for a new loan? ** f4 f5 f6 Search ムー 17 4+ First National Bank hp f8 fg f10 144 DII DDI f11
Wontaby Ltd. is extending its credit terms from 30 to 45 days. Sales are expected to increase from $4.90 million to $6.00 million as a result. Wontaby finances short-term assets at the bank at a cost of 10 percent annually. Calculate the additional annual financing cost of this change in credit terms. (Use 365 days in a year. Do not round intermediate calculations. Round the final answer to the nearest whole dollar. Enter answer in whole dollar not in million.) Annual financing cost $
On June 2, Fat Tires Ltd. borrowed $10,000.00 with an interest rate of 7.6%. The loan was repaid in full on November 14, with payments of $2700 00 on September 1 and $3300.00 on October 3. What was the final payment? The final payment was $ (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed)
Red Lions Corporation takes out a $8.6 million short-term amortizing loan for nine months at 11.4% per annum. It makes monthly payments to pay off the loan. However, after completing 5 months of repayments, it decides to payoff early the remaining part of the loan amount. Q1. How much are the monthly repayment (in millions of dollars)? millions. (Give answer to 4 decimal places) $ Q2. How much does it repay to payoff the remaining part of the loan (in millions of dollars)? $ millions. (Give answer to 4 decimal places)
A firm borrows $200,000 at 10 percent from a bank with a compensating balance of 20 percent. What is the effective rate of interest if the loan is discounted and the principal is repaid at the end of one year? 15.28% 16.28% 17.28% 14.28% 19.55%
If a firm has sales of $21,764,000 a year, and the average collection period for the industry is 55 days, what should this firm’s accounts receivable be if the firm is comparable to the industry? Assume there are 365 days in a year. Do not round intermediate calculations. Round your answer to the nearest dollar.

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS