Goblers Ltd is expanding in 2021 and would like to obtain a loan from a bank in order to finance its growth. The Financial Manager has been presented with the following options from two different banks, but she is unsure which of the loans to choose: Bank DEF – interest on the loan at 10.5%, compounded quarterly. Cs Scanned vwith CamScanner. Bank RST- interest on the loan at 10.8%, compounded monthly. 2.
Q: goblets Ltd is expanding in 2021 and would like to obtain a lon from a bank in order to finance its…
A: Computation of the EAR for each loan is shown as follows: Formulation is shown: To open the "EFFECT…
Q: A Firm has two alternatives: a. to raise a loan of 100,000 €, due in 3 months, at 10% p.a.…
A: a. loan amount = €100,000 r=10% p.a =10%4=2.5% t=3 months=312 A=p×1+rt=100,000×1+2.5%×312=100625
Q: nd a minimum required rate of return of 10%. the current average age of receivables is 70 days but…
A: Income is a residual amount left after netting of net expenses incurred to earn that profit. The net…
Q: Cloud Venture has a line of credit with a local bank of $75,000. The loan agreement calls for…
A: Information provided: Line of credit = $75000 Interest “r” = 6% Compensating balance = 3% Amount to…
Q: Tokyo Corporation must pay its supplier P500,000. Tokyo Corp's bank has advertised a 270-day loan…
A: Compensating Balance: Compensating balance means the amount that a borrower deposits in the…
Q: You borrow $ 1 million on a 10-year loan from a bank to finance the expansion of your business.…
A: Note: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts…
Q: How much will your investment be worth in 17 years at each bank?
A: Time value of money (TVM) means that the amount received in the present will have more value than…
Q: Vandermark Credit Corp. wants to earn an effective annual return on its consumer loans of 15.25…
A: Effective annual rate = [1+Annual Rate/365]^365 - 1
Q: Today is July 1 and Hilda Company will need a fixed interest rate loan of P1,200,000 for 6 months…
A: The investors will invest to earn profits from the investment. The investment can be made in shares,…
Q: Goblers Ltd is expanding in 2021 and would like to obtain a loan from a bank in order to finance its…
A: Loan is a value which is borrowed from the other sources like banks and this amount is repaid later…
Q: National Co. needs to borrow P300,000 for the next 6 months. The company has a line of credit with a…
A: The company does not have sufficient compensating balance so it will have to borrow a sum greater…
Q: A local bank is advertising that it pays depositors 6% compounded monthly, yielding an effective…
A: Effective Annual Rate refers to the real return on a savings account or any interest-paying…
Q: KBL Bank Limited quotes a 21 percent interest rate on one-year loans. So, if you borrow $75,000, the…
A: Given information: KBL bank Limited quoted 21% interest one year loans. But payments are deducted…
Q: First Bank is sending university alumni an invitation to obtain a credit card, with the name of…
A: Rate of return is the rate at which the investor will earn the profit or incur loss on the…
Q: Today is July 1 and Barow Company will need a fixed interest rate loan of P1,200,000 for 6 months…
A: A fixed interest loan rate is a rate in which interest rate did not fluctuate for the period of…
Q: Van Buren Resources Inc. is considering borrowing $100,000 for 202 days from its bank. Van Buren…
A: Given:Borrowing amount=$1000000 for 202 daysPayable amount $3000 of interest at maturityRepaid…
Q: July 1, Bee Company will need a fixed interest rate loan of P1,200,000 for 6 months starting on…
A: A company can borrow money from the bank if the company needs money for the business. The bank will…
Q: It is now January 1, 2018. You plan to make 5 deposits of $200 each, one every 6 months, with the…
A: Future value is the expected value of an investment at a future date at given rate of return. given:…
Q: Niagular Corp. needs to take out a one-year bank loan of $450,000 and has been offered loan terms by…
A: Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: What effective annual interest rate are yo being charged
A: Information Provided: Face amount = $2000 Interest amount = 14% Compensating balance = 20%
Q: A local bank is advertising that it pays depositors 6% compounded monthly, yielding an effective…
A: Simple interest is calculated by multiplying principal into rate of interest for the given period of…
Q: Gizmonic Institute Corp. needs to take out a one-year bank loan of $400,000 and has been offered…
A: Bank loan = $400,000 Simple interest rate = 9% Add on interest rate = 6%…
Q: Brady and Sons uses accounts receivable as collateral to borrow money for operations and payroll…
A: Interest is the amount of charge that is being levied on invested amount. It can be simple interest…
Q: Data Back-Up Systems has obtained a $29,000, 90-day bank loan at an annual interest rate of 15%,…
A: a)The computation of amount of interest on the loan is as follows:Working note:Hence, the amount of…
Q: What is the approximate amount of each payments that Yumati will need to make?
A: Here is the calculation for the above question.
Q: A growing company plans to borrow IDR 1,000,000,000 for 5 years from a bank. Bank Sweet is willing…
A: Repayment fund is the amount set aside to pay a sum of money over a period of time. This fund is…
Q: On April 2, 2020, shortly after the $7.5 million deposit outflow, Key Bank had borrowed the needed…
A: Net interest margin in simple word refers to interest earned by bank on loan given excluding…
Q: Elliott Credit Corp. wants to earn an effective annual return on its consumer loans of 14.5 percent…
A: The formula used as follows: APR=m×1+EAR1m-1
Q: Starr Co, has been approved for a $ 100,000 loan commitment from its local bank. The bank has…
A: Loan commitment= $100,000 Term = 1 year Up front fee =75 basis point=0.75% Back end fee =25 basis…
Q: A local finance company quotes a 12 percent interest rate on one-year loans. So, if you borrow…
A: Quoted rate can be calculated using the RATE function in excel. Rate function = RATE ( nper, pmt ,…
Q: Taube is considering borrowing $33 million by taking out a six-year bank loan that carries 10%…
A: Given options, Cash Balance of $20 million Borrowing $33 million by taking 6-year loan @10% interest…
Q: Bank JPX is offering personal loans of $35,000 to be repaid over 6 years with payments of $625 per…
A: Here, To Find: Effective annual rate (EAR) =?
Q: A local bank is advertising that it pays depositors 6% compounded monthly, yielding an effective…
A: The present value is the value of the sum received at time 0 or the current period. It is the value…
Q: A bank offers and investment account that has an annual interst rate of 9.9%, compounded quarterly.…
A: The present value is the value of the sum received at time 0 or the current period. It is the value…
Q: An investor can invest money with a particular bank and earn a stated interest rate of 15.40%;…
A: Hi there! Thank you for the question. Post has multiple questions. As per company guidelines expert…
Q: Brady and Sons uses accounts receivable as collateral to borrow money for operations and payroll…
A: Given information: Amount borrowed $300,000 Interest rate up to 4 months 12% Interest rate after 4…
Q: Woolworth has decided to borrow $10,000,000 via floating rate loan for 3 years. It must decide…
A: Given:
Q: Goblers Ltd is expanding in 2021 and would like to obtain a loan from a bank in order to finance its…
A: Given, Bank Interest on Loan (r) Number of Compounding (n) TMN 10.50% 2 (Bi-annual) DEF…
Q: Use the information below for the next two problems. Schlitz Inc. has obtained a 90-day bank…
A: Given: Loan amount $10,000 Annual Interest Rate 15% Loan period in days 90 Number of days…
Q: A local finance company quotes an interest rate of 17.2% on one-year loans. So, if you borrow…
A: In this question we need to compute the effective annual rate (EAR) from following details : Present…
Q: mpany owes Php 80,000 which includes the interest, to be paid one year from now by monthly deposits.…
A: In this we need to calculate the future value of growing annuity.
Q: Ames Corporation has borrowed $5 million from a bank with the understanding that it will pay the…
A: monthly payment (pmt)formula: pmt=p×r1-1+r-n×m where, p= principal r=rate per frequency n=number of…
Q: You come across two banks offering different compounding interest rates. Public Bank offers 12…
A: Effective Annual Rate: The effective annual rate of interest is the actual or the real rate of…
Q: ABC would like to hire two loan collectors to speed up its collection process. Each of the loan…
A: Accounts Receivables- It includes those person or entities to whom goods are sold on credit basis or…
Q: Tedros borrowed $2 million and planned to repay the loan by making equal month-end payments over a…
A: A financial measurement that calculates the worth of a potential sum of money or stream of payments…
Calculate the effective annual rate (EAR) for each loan. round to two decimals
![Goblers Ltd is expanding in 2021 and would like to obtain a loan from a bank in order to finance its
growth. The Financial Manager has been presented with the following options from two different
banks, but she is unsure which of the loans to choose:
Bank DEF
interest on the loan at 10.5%, compounded quarterly.
ts Scanned with CamScanner
Bank RST- interesi on tne loan at 10.8%, compounded monthly.
2.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F18bf6483-e21f-47cc-97d9-c7112515ea9e%2F421254b2-45da-4fd4-91d3-71885bb2ec6b%2Fct8jjf_processed.jpeg&w=3840&q=75)
![](/static/compass_v2/shared-icons/check-mark.png)
Step by step
Solved in 3 steps with 1 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
- goblets Ltd is expanding in 2021 and would like to obtain a lon from a bank in order to finance its growth. Financial manager has been presented with the following options from two different banks, but she is unsure which of the loans choose: Bank DEF - interest on the loan at 10.5%, compounded quarterly bank RST - interest on the loan at 10.8%, compounded monthly Q.5.1 calculate the effective Annual Rate (EAR) llfor each loan. Round to two decimals Q.5.2 Advise the financial manager of Goblers Ltd on which bank she should choose. Support your choice with reasoning Q.5.3 The financial manager obtains a quote from a third bank, bank TMN, for interest on the loan at 10.5%, compounded bi-annually without calculating the effective annual rate (EAR for the loan from bank TMN, would you expect the EAR to be higher or lower than the EAR for the loan from Bank DEF? Motivate your answer with reasoningIn 2020, XYZ Co. has an existing loan in the amount of $1.5 million with an annual interest rate of 9.5%. The company provides an internal company prepared financial statement to the bank under the loan agreement. Two competing banks have offered to replace XYZ’s existing loan agreement with a new one, starting 2021. Sadaf Remo Bank has offered to loan XYZ $1.5 million at a rate of 8.5% but would require XYZ to provide financial statements that have been reviewed by an audit firm. Amaranth Bank has offered to loan XYZ $1.5 million at a rate of 7.5% but would require XYZ to provide financial statements that have been audited by an audit firm. The controller of XYZ approached an audit firm, BRONX Partners, and was given an estimated cost of $12,000 to perform a review and $20,000 to perform an audit. The controller of XYZ approached another audit firm, Essen & Co. for an estimate. Essen & Co, has quoted $15,000 to perform a review, and $30,000 to perform an audit. XYZ…In 2020, XYZ Co. has an existing loan in the amount of $1.5 million with an annual interest rate of 9.5%. The company provides an internal company prepared financial statement to the bank under the loan agreement. Two competing banks have offered to replace XYZ’s existing loan agreement with a new one, starting 2021. Sadaf Remo Bank has offered to loan XYZ $1.5 million at a rate of 8.5% but would require XYZ to provide financial statements that have been reviewed by an audit firm. Amaranth Bank has offered to loan XYZ $1.5 million at a rate of 7.5% but would require XYZ to provide financial statements that have been audited by an audit firm. The controller of XYZ approached an audit firm, BRONX Partners, and was given an estimated cost of $12,000 to perform a review and $20,000 to perform an audit. The controller of XYZ approached another audit firm, Essen & Co. for an estimate. Essen & Co, has quoted $15,000 to perform a review, and $30,000 to perform an audit. XYZ…
- In 2020, XYZ Co. has an existing loan in the amount of $1.5 million with an annual interest rate of 9.5%. The company provides an internal company prepared financial statement to the bank under the loan agreement. Two competing banks have offered to replace XYZ’s existing loan agreement with a new one, starting 2021. Sadaf Remo Bank has offered to loan XYZ $1.5 million at a rate of 8.5% but would require XYZ to provide financial statements that have been reviewed by an audit firm. Amaranth Bank has offered to loan XYZ $1.5 million at a rate of 7.5% but would require XYZ to provide financial statements that have been audited by an audit firm. The controller of XYZ approached an audit firm, BRONX Partners, and was given an estimated cost of $12,000 to perform a review and $20,000 to perform an audit. The controller of XYZ approached another audit firm, Essen & Co. for an estimate. Essen & Co, has quoted $15,000 to perform a review, and $30,000 to perform an audit. XYZ…Van Buren Resources Inc. is considering borrowing $100,000 for 182 days from its bank. Van Buren will pay $6,000 of interest at maturity, and it will repay the $100,000 of principal at maturity. a. Calculate the loan’s annual financing cost. b. Calculate the loan’s annual percentage rate. c. What is the reason for the difference in your answers to Parts a and b?The company decided to borrow a one-time loan of $100,000 in Jan 2023 to launch a marketing campaign to expand the business. The $100,000 is taken from the bank and use in the marketing campaign directly and as such no additional $ is plough back into the cash flow. Given the bank charges 4% interest rate and the company wishes to borrow for 5-year term, add another row for Annual Payment to the bank (SAFELOCK LTD chooses to pay monthly payment, calculate the total 12 monthly payments using the appropriate built-in functions and formula.) Also calculate the Total Bank term payment for the loan assuming the monthly payment scheme, Total Interest for the loan taken.
- Today is July 1 and Hilda Company will need a fixed interest rate loan of P1,200,000 for 6 months starting on October 1. The bank quotes an FRA rate of 8% for the loan. If the actual rate on October 1 is 10%, how much interest in pesos, should Hilda Company pay the bank (actual cash outflow)?(Related to Checkpoint 18.2) (Estimating the cost of bank credit) Paymaster Enterprises has arranged to finance its seasonal working-capital needs with a short-term bank loan. The loan will carry a rate of 16 percent per annum with interest paid in advance (discounted). In addition, Paymaster must maintain a minimum demand deposit with the bank of 7 percent of the loan balance throughout the term of the loan. If Paymaster plans to borrow $110,000 for a period of 6 months, what is the annualized cost of the bank loan?On December 31, 2019, Panda Bank recorded an investment of P5,000,000 in a loan granted to a client. The loan has a 10% effective interest rate payable annually every December 31. The principal is due in full at maturity on December 31, 2022. Unfortunately, the borrower is experiencing significant financial difficulty and will have difficult time in making full payment. The bank projected that the entire principal will be paid at maturity and 4% interest or P200,000 will be paid annually on December 31 of the next three years. There is no accrued interest on December 31, 2019. The PV of 1 at 10% for three periods is 0.75, and the PV of an ordinary annuity of 1 at 10% for three period is 2.49. What is the loan impairment loss for 2019? A. P600,000 B. P752,000 C. P250,000 D. P748,000
- The First Common Bank has advertised one of its loan offerings asfollows: “We will lend you $125,000 for up to 3 years at an APR of 7.5% (interestcompounded monthly).” If you borrow $125,000 for one year, how much interestwill you have paid and what is the banks APY?(Related to Checkpoint 18.2) (Estimating the cost of bank credit) Paymaster Enterprises has arranged to finance its seasonal working-capital needs with a short-term bank loan. The loan will carry a rate of 14 percent per annum with interest paid in advance (discounted). In addition, Paymaster must maintain a minimum demand deposit with the bank of 8 percent of the loan balance throughout the term of the loan. If Paymaster plans to borrow $90,000 for a period of 2 months, what is the annualized cost of the bank loan? The annualized cost of the bank loan is%. (Round to two decimal places.) (...)Gab Company expects that it will need P600,000 cash for March 2022. Possible means of financing are: (A) Establish a 1-year credit line for P600,000. The bank requires a 2 percent commitment fee. The interest rate is 21 percent. Funds are needed for 30 days. (B) Fail to take a 2/10, net/40 discount on a P600,000 credit purchase. (C) Issue P600,000, 20 percent commercial paper for 30 days. Which financing strategy should be selected? Provide solution a. Strategy Ab. Strategy Bc. Strategy Cd. Strategy A and Be. Strategy B and C
![EBK CONTEMPORARY FINANCIAL MANAGEMENT](https://www.bartleby.com/isbn_cover_images/9781337514835/9781337514835_smallCoverImage.jpg)
![EBK CONTEMPORARY FINANCIAL MANAGEMENT](https://www.bartleby.com/isbn_cover_images/9781337514835/9781337514835_smallCoverImage.jpg)