Horizons plc had the following bank loans outstanding during the whole of 20X8 which form thecompany's general borrowings for the year:10% loanrepayable 20X98% loanrepayable 20Y2Select one:O a. £850,000O b. £892,500O c. £305,625d. £500,000e. £541,875O f. £425,000£m2575Horizons plc began construction of a qualifying asset on 1 May 20X8 and withdrew funds of £4.5 millionon that date to fund construction. On 1 September 20X8 an additional £6 million was withdrawn for thesame purpose.Calculate the borrowing costs which can be capitalised in respect of this project for the year ended 31December 20X8.

Introduction: Interest costs incurred during construction period can be capitalized to the extent of…

Answered: Horizons plc had the following bank…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Bank B, on the other hand, makes a $105 loan at 7%, with $100 in deposits at 5% and only $10 in equity. Bank B purchases the rest of Assets as G-Bond at 5% interest rate. Bank B Loan 7% $105 G-Bond 5% ? Deposits 5% $100 Equity $10 Total Assets $? Total Equity and Deposit $110 Compute ROA of Bank B, 5.62% 7.77% 2.36% 1.45% 3.88% 8.85% 4.56% 6.12%
A company has borrowed £776,600 from a bank. The loan is to be repaid by level instalments, payable annually in arrears for 18 years from the date the loan is made. The annual repayments are calculated at an effective rate of interest of 6.7% per annum for the first 8 years and 4. 6% per annum thereafter. Calculate, to 2 decimal places, the following: (i) The level annual payments of interest and capital: (ii) The total amount of capital repaid to the bank immediately after the 12th payment: Hint: This is the opposite of the loan outstanding. (iii) The total amount of interest paid to the bank during the first 12 years: Hint: Considering all of the payments made during the first 12 years.
The clean Bank has the following assets and liabilities as of year-end.All asset and liability item have face value of $1,000 and are priced at par.And interests and coupons are paid annually for all asset and liability items. Assets Amount($millions) Annual Rate Liabiltiies and Equity Amount($millions) Annual Rate 5-year loans 40 40% 3-year term deposit 20 4% 5-year coupon bonds 60 8% 5-year term deposit 30 8% Equity 50 Total 100 100 Please calulate the Clean Bank's maturity gap.What does the maturity gap imply about the interest risk of the bank?Will you view on the interest risk of the bank be different under duration model?Explain carefully..
17. Four banks offer different terms for an $8000 loan. Which option should the customer choose to pay the least amount of interest? a. 32 monthly payments of $278.44 at 8% annual interest, compounded monthly b. 34 monthly payments of $260.08 at 7% annual interest, compounded monthly c. 36 monthly payments of $248.85 at 7.5% annual interest, compounded monthly d. 40 monthly payments of $222.99 at 6.5% annual interest, compounded monthly
Bank of Charub ($ million)Assets: Liabilities and Net Worth:270 day US Treasury bills $500m 1 year Certificates of Deposit $550m2 year consumer loans Demand Deposits $750mFixed rate, 12% p.a. annually $275m 2 year Bonds $175m7 year commercial loans $350m Fixed rate, 7.5% p.a. annuallyFixed rate, 9% p.a. annually Overnight Fed Funds $350m10 year fixed rate mortgages $675mFixed rate, 6.5% p.a. monthly10 year floating rate mortgages $125m Equity $100mLIBOR+50bp, monthly roll dateNotes: The 1 year Certificates of Deposit pay 1.95% p.a. annually. The demand depositsare non-interest bearing and have a duration of zero. The 7 year commercial loans have aduration of 4.75 years. The fixed rate mortgages have a duration of 8.3 years. All valuesare market values. 5. What is the convexity of the 2 year consumer loans if they yield 6% p.a. witha coupon rate of 12% p.a. paid annually?a. 4.98b. 2.83c. 3.85d. 1.95e. 2.01
Horizons plc had the following bank loans outstanding during the whole of 20X8 which form the company’s general borrowings for the year: £m 10% loan repayable 20X9 250 8% loan repayable 20Y2 750 Horizons plc began construction of a qualifying asset on 1 May 20X8 and withdrew funds of £45 million on that date to fund construction. On 1 September 20X8 an additional £60 million was withdrawn for the same purpose. Calculate the borrowing costs which can be capitalised in respect of this project for the year ended 31 December 20X8. Select one: a. £5,000,000 b. £4,250,000 c. £5,418,750 d. £850,000 e. £8,925,000 f. £3,056,250
Consider the following balance sheet for Northern Highland Credit Union (NHCU) before answering parts (i) through (v). Assets ($ million) $ Liabilities ($ million) $ Cash 30 Overnight interbank borrowing (7.00%) 160 T-notes 2 month (7.05%) 60 2-year CD (5%) 20 T-notes 3 months (7.25%) 80 7 year fixed rate Subordinated debt (8.55%) 150 T-notes two-year (7.50%) 60 Equity 25 T-notes 10-year (8.96%) 100 Corporate bonds (>5 years to maturity) 25 Total assets 355 Total liabilities and Equity 355 What is the repricing (funding) gap over the 0-to-6 months maturity bucket?
TI209 JADMANE BO Sources Trade and other payables Short-term borrowings Mortgage Long-term borrowings Share capital Retained earnings Amounts $200,000 250,000 500,000 250,000 300,000 800,000 The before-tax bank charges are 11.0% for the short-term borrowings, 10.0% for the long-term borrowings, and 10.5% on the mortgage. The shareholders expect to earn 16%. Assume that the company's income tax rate is 50%. 40% Questions financing 1. Calculate the company's after-tax cost of borrowing. 2. Calculate the company's weighted average cost of capital.
Bank B, on the other hand, makes a $105 loan at 7%, with $100 in deposits at 5% and only $10 in equity. Bank B purchases the rest of Assets as G-Bond at 5% interest rate. Bank B Loan 7% $105 G-Bond 5% ? Deposits 5% $100 Equity $10 Total Assets $? Total Equity and Deposit $110 compute ROE of Bank B= 38% 14% 13% 21% 26% 15% 16% 14%
14. Gingerbread Corp was issued a $220,000 loan at 6%. The amortization schedule created by the company accountant is presented below. How much interest will Gingerbread Corp record in interest expense over a period of 6 years?

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