Answered: How to estimate an appropriate loan…

How to estimate an appropriate loan tenor of a PE fund? If the fund is maturing in 2 years, and looking to refinance its debt, would a 2 year loan facility be appropriate?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: 12. A property has an NOI of $800,000. If you have a loan with annual debt service of $600,000, what…

A: DCR (Debt coverage ratio) It helps to determine the available net operating income to cover per unit…

Q: How much market value of each of the zeros will be necessary to fund the plan if you desire an…

A: Information Provided: Annuity amount = $1.4 million per year Interest rate = 8%

Q: Find the periodic payments PMT necessary to accumulate the given amount in an annuity account.…

A: The future value of the annuity is the future worth of a cash flow series at a certain rate of…

Q: If you will live for X years after retirement and the estimated return for your investment portfolio…

A: Note: The question provides a choice of two retirement plans: Fidelity. 401(k) plan” or “Hines…

Q: If you place $25,500 into an 80-day short-term GIC at TD Canada Trust earning 0.55% simple interest,…

A: Maturity value = Amount invested + Interest earned

Q: Discuss the payback method and what the payback periods of the old backhoes and new backhoes reveal…

A: Meaning Of NPV :- Net present value (NPV) is the difference between the PV of cash inflows and the…

Q: You manage a pension fund that will provide retired workers with lifetime annuities. You determine…

A: Bonds payable is a type of instrument where by an amount is borrowed for a fixed period with fixed…

Q: You need to know the profitability of an investment fund where the amount to invest is $ 17,000, the…

A: Profitability means receiving excess funds over the investment amount. It is an additional gain…

Q: Fill the correct inputs on the T184 finance application to determine what initial investment would…

A: Given: Future value = $28,000 Interest rate = 2.14% Years = 3

Q: 1 Year Plan ☐ Projected Income ☐ Savings Goal ☐ Monthly Budget Bank Accounts and Lines of Credit…

A: Making a one-year financial plan is a calculated move toward managing your money so that you can…

Q: Projected Income ☐ Savings Goal ☐ Monthly Budget ☐ Bank Accounts and Lines of Credit First/Small…

A: Making a one-year financial plan is a calculated move toward managing your money so that you can…

Q: You manage a pension fund that will provide retired workers with lifetime annuities. You determine…

A: A.Five Year Zero Coupon Bond= $12 million Twenty Year Zero Coupon Bond= $8 million B.Fave Value of…

Q: What annual deposit into a sinking fund at 5% compounded annually will be needed to raise half a…

A: P500000 is needed at the end of 10 years. The Fair value at the end of 10 years = Annual Deposit x…

Q: What is the equivalent average annual effective rate of interest over 5-year period if the fund…

A: Effective interest rate is the interest rate considering the impact of compounding on the interest…

Q: Whats the paybck period & discounted payback period for a project with costof 2OO,OOO that generates…

A: for payback period there is not need to discount the cash flows Total cash in first 2 years = 30,000…

Q: anscrip Suppose someone wants to accumulate $50,000 for a college fund over the next 15 years.…

A: Future value is the estimation of current value of future cash flows that are likely to be received…

Q: The sum P350,000 will be needed at the end of 3 years. If money can be invested at 5% compounded…

A: We need to fist determine the semi annual end of period payment that will accumulate to the desired…

Q: Given a loan of $48,000 for three years with a rate of 10%, what are the total finance charges?…

A: Interest Charge - Interest is the fixed some of money to be paid on borrowing amount. Borrowing…

Q: Explain how the equivalent annual annuity can be used to compare projects with different lives

A: The equivalent annual annuity approach is used to compare projects with different lives by…

Q: Present value of an annuity due. Find the present value of an annuity due of 2000 per annum for 14…

A: Annual payment = ₹ 2000 Period = 14 Years Interest rate = 9%

Q: If the five-year present value annuity factor is 3.60478 and the four-year present value annuity…

A: The objective of the question is to find the present value of $1 received at the end of five years…

Q: Term Discounting Time value of money Amortized loan Ordinary annuity Annual percentage rate Annuity…

A: Future value:Future value is calculated using the rate of return, number of years, payment per…

Q: What is the future value of an investment of $1,000 paid every year for five (5) years when the…

A: Future value of amount includes the amount being deposited and amount of the compounding interest…

Q: Given a principal amount of P500,000 and an interest rate of 5.08% per year, construct a loan…

A: Loan amortization schedule: It implies to a detailed table that shows the periodic loan payments…

Q: What are the investment plan that are advisable for beginners in a span of 1 year? Give some…

A: Answer:- Investment meaning:- An item bought or invested in to grow wealth and save money through…

Q: 5. A debt of $250,000 is to be repaid after 5 years. If the interest is charged at 5% compounded…

A: Debt repayment involves the process of returning borrowed money, typically with interest, to the…

Q: How can the initial investment be depreciated on a seven-year MACRS?

A: If a company purchases a fixed asset, the value of the asset cannot be same every year. The value of…

Q: Using the sinking fund formula or a financial calculator, complete the following: (Do answer to the…

A: A sinking fund refers to an amount that is kept aside for paying off the debt obligations at the…

Q: 4. ( s) Fund A earns interest at a simple rate of i% a year. $P is invested in fund A. (a) What is…

A: Simple Interest: An investment is said to earn a simple interest if the interest is computed on the…

Q: Simple interest of i = 5% is being credited to a fund. In which period (n) is this equivalent to an…

A: Effective interest rate is the rate calculated for no. of compounding periods per year using the…

Q: Solve by using the sinking fund or amortization formula. (Round your answer to the nearest cent.)…

A: The question asked to compute the sing king fund payment. Future value: Future value refers to the…

Q: You manage a pension fund that will provide retired workers with lifetime annuities. You determine…

A: Duration of bond is the weighted required to receive all cash flows from the bond and it shows the…

Q: You manage a pension fund that will provide retired workers with lifetime annuities. You determine…

A: Zero coupon bond refers to the amount of bond on which no interest are to be charged and the…

Q: You manage a pension fund that will provide retired workers with lifetime annuities. You determine…

Q: Requirement a. Compute the carrying value of Famous Frosting's equipment The carrying value of the…

A: Depreciation helps to allocate the cost of assets over the useful life. Fixed assets tend to lose…

Q: Solve by using the sinking fund or amortization formula. (Round your answer to the nearest cent.)…

A: The concept of time value of money states that the current worth of money is more than its value in…

Q: For the sinking fund, use Table 12-1 to calculate the amount (in $) of the periodic payments needed…

A: Step 1 The worth of a series of recurrent payments at a specific future date, assuming a specific…

Q: ou manage a pension fund that will provide retired workers with lifetime annuities. You determine…

A: Duration of bond is the weighted required to receive all cash flows from the bond and it shows the…

Q: Find the amount of a perodic payment necessary fur the deposit of a sinking fund. Amount needed…

A: A sinking fund is created for repayment of debt.A fixed sum of money is set aside periodically…

Question

How to estimate an appropriate loan tenor of a PE fund?

If the fund is maturing in 2 years, and looking to refinance its debt, would a 2 year loan facility be appropriate?

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

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

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, accounting and related others by exploring similar questions and additional content below.

Similar questions

You manage a pension fund that will provide retired workers with lifetime annuities. You determine that the payouts of the fund are going to closely resemble level perpetuities of $2.1 million per year. The interest rate is 10%. You plan to fully fund the obligation using 5-year and 20-year maturity zero-coupon bonds.Required: a. How much market value of each of the zeros will be necessary to fund the plan if you desire an immunized position? (Do not round intermediate calculations. Enter your answers in millions. Round your answers to 1 decimal place.) Market Value Five year: Twenty year: b. What must be the face value of each of the two zeros to fund the plan? (Do not round intermediate calculations. Enter your answers in millions rounded to 2 decimal places.) Face Value Five year: Twenty year:
A fund is built with annual payments increasing by $1 from $1 to $10 and then decreasing by $1 to $0. The first payment of $1 is made today. If the fund is used to purchase a ten-year level annuity with the first payment at twenty years from today, what is the amount of the level payment? (Assume an annual effective rate of interest of 4%.) Possible Answers A B D <$16 c≥ $17 but < $18 E ≥ $16 but < $17 ≥ $18 but < $19 ≥ $19
Problem 6. Including loan The following investment alternatives are being evaluated. Assuming that there is only $30,000 available and the surplus will be acquired through a loan at 5.5% annual effective interest payable in annual payments over 4 years. Determine which alternative should be selected. Perform the analysis using the Present Value, Equivalent Annuity and IRR Methods. Use a MARR = 7% Year A B 0 -25000 -46000 1 7460 16640 2 7460 16640 3 7460 16640 4 6500 12600 5 6000 10600
Use the following 8% interest factors. Present Value ofOrdinary Annuity Future Value ofOrdinary Annuity 7 periods 5.20637 8.92280 8 periods 5.74664 10.63663 9 periods 6.24689 12.48756 What amount should be recorded as the cost of a machine purchased December 31, 2020, which is to be financed by making 8 annual payments of $21500 each beginning December 31, 2021? The applicable interest rate is 8%. A.)$150500 B.)$228688 C.)$134308 D.)$123553
(c) A sum of 10,000 RO is required in 5 yoars from now. An annual sinking fund is to be sot up that will return an interest rate of 6% over this period. What will be the annual sinking fund instalments?
Which of the following loans has payments that can get larger?A. 15 year FRMB. 20 year FRMC. 30 year FRMD. 5/1 ARM
A borrower looking to borrow $100,000 can obtain an 80 percent loan with an 8 percent interest rate and monthly payments. The loan is to be fully amortized over 25 years. Alternatively, he could obtain a 90 percent loan at an 10 percent rate with the same loan term. What is the incremental ANNUAL cost of borrowing the additional funds? 20.13 17.42 23.98 18.19
If you will have an amortization to buy house and lot, which plan will be the best? Explain comprehensively
A borrower bought a house for $300,000; he can obtain an 80% loan with a 20-year fully amortizing, 7% interest rate and monthly payment. Alternatively, he could get a 30-year fully amortizing 90% loan at 9% What is the incremental cost of borrowing the additional fund?
Q.30.