þalagang Pilipina Company needs P5,000,000 short-term credit for 90 days. To produce the amount, the company intends to sell commercial paper with a discount rate of 15%, issuance cost of P75,000 and other flotation cost of P15,000. How large should the commercial paper issue be to achieve the needed amount? (nearest peso amount)

þalagang Pilipina Company needs P5,000,000 short-term credit for 90 days. To produce the amount, the company intends to sell commercial paper with a discount rate of 15%, issuance cost of P75,000 and other flotation cost of P15,000. How large should the commercial paper issue be to achieve the needed amount? (nearest peso amount)

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

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1) A factoring company discounts a client a document with a maturity value of 40,000 at a discount rate of 16% simple per year with a maturity of 90 days. On the same day, the factoring company discounts the document at a financial institution that offers a discount rate of 15% simple annual rate. What was the profit that the factoring company obtained? options: 100 72 181 142
Foxtrot Corporation is purchasing a new Ford Transit delivery van for $24,600. Its lender requires a maximum loan to value ratio of 80% on the purchase price of the vehicle. The term of the loan is 5 years. The interest rate is 5% APR. The loan is a closed end credit loan. There is no trade-in. Sales tax is 7%. Documentation fee is $275. a. What is the total cost of the delivery van including purchase price, sales tax, and documentation fee; and how much is classified as an asset on the balance sheet and how much is classified as an expense on the income statement? b. How much cash must Foxtrot Corporation have to make the down payment? c. How much of the first monthly payment will be interest and how much of the last monthly payment will be interest?
A company can issue a 45-day $10 million commercial paper at a rate of 4.50%. It can reduce the rate to 4.35% if it is backed by a standby letter of credit (SBLC). A bank is willing to issue the SBLC for a fee of 10 basis points. The following is true: A The fee for issuing the SBLC is $10,000 B The net savings to the issuer is $1,250 C The amount received by the issuer for the commercial paper without an SBLC is $9,945,625. D The difference in the amount received by the issuer with and without the SBLC is $1,875.
Company is contemplating factoring its accounts receivable. The factor will acquire P250,000 of the company’s accounts receivable every 2 months. An advance of 75 percent is given by the factor on receivables at an annual charge of 18 percent. There is a 2 percent factor fee associated with receivables purchased. What is the cost of the factoring arrangement? choose the letter of the correct answera. P30,000.00b. P33,750.00c. P63,750.00d. P103,000.00e. P125,000.00
A Start up data analytics company needs P500,000 for its operations. One bank is willing to lend it money for one year at 12.5% interest per annum (discounted). Another lender is charging 14% with principal and interest payable at the end of the year. A third financier will lend it the amount payable in 12 equal monthly installments of Php 46,00 each. Which offer is best for the business?
1. ABC Co has credit sales of $45 million per year and on average settles accounts with trade payables after 60 days. One of its suppliers has offered the company an early settlement discount of 0·5% for payment within 30 days. Administration costs will be increased by $500 per year if the early settlement discount is taken. ABC Co buys components worth $1·5 million per year from this supplier. From a different supplier, ABC Co purchases $2·4 million per year of Component L at a price of $5 per component. Consumption of Component L can be assumed to be at a constant rate throughout the year. The company orders components at the start of each month in order to meet demand and the cost of placing each order is $248·44. The holding cost for Component L is $1·06 per unit per year. The finance director of ABC Co is concerned that approximately 1% of credit sales turn into irrecoverable debts. In addition, she has been advised that customers of the company take an average of 65 days to…
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An Scottish company is offering the terms of 2/10 net 30. For a purchase of $3,000, answer the following questions: a) When is the payment due? b) How much will the company pay if it pays in 30 days? c) How much will the company pay if it pays in 10 days?

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