The employee credit union at State University is planning the allocation of funds for the coming year. The credit union makesfour types of loans to its members. In addition, the credit union invests in risk-free securities to stabilize income. The variousrevenue-producing investments, together with annual rates of return, are as follows.Type of Loan/InvestmentAutomobile loansFurniture loansOther secured loansSignature loansRisk-free securities$●Automobile loansThe credit union will have $2,400,000 available for investment during the ng year. State laws and credit union policiesimpose the following restrictions on the composition of the loans and investments.Furniture loansOther secured loans• Risk-free securities may not exceed 30% of the total funds available for investment.Signature loans may not exceed 10% of the funds invested in all loans (automobile, furniture, other secured,and signature loans).Signature loansRisk-free securities• Furniture loans plus other secured loans may not exceed the automobile loans.• Other secured loans plus signature loans may not exceed the funds invested in risk-free securities.How should the $2,400,000 be allocated to each of the loan/investment alternatives (in dollars) to maximize total annualreturn?$Annual Rate of Return (%)$$9$11$12What is the projected total annual return (in dollars)?1310

Projected Total Annual Return is the sum of investment return which is invested in various…

Answered: The employee credit

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 1hM

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Type of Loan/Investment Automobile loans Furniture loans Other secured loans Signature loans Risk-free securities $1540000 $440000 $ 220000 $ 660000 Annual Rate of Return (%) xxx> 9 What is the projected total annual return? $514800 11. The credit union will have $2,200,000 available for investment during the coming year. State laws and credit union policies impose the following restrictions on the composition . Risk-free securities may not exceed 30% of the total funds available for investment. • Signature loans may not exceed 10% of the funds invested in an loans (automobile, furniture, other secured, and signature loans). . Furniture loans plus other secured loans may not exceed the automobile loans. Other secured loans plus signature loans may not exceed the furids invested in risk-free securities. 12 How should the $2,200,000 be allocated to each of the loan/investment alternatives to maximize total annual return? Automobile loans $ 22 Furniture loans Other secured loans Signature…
What would be the proper key strokes on the BA II Plus Financial Calculator by Texas Instrument for the below response?
To figure out how much total interest that you earn when you reach your investment goal, you ____________. Select one: a. interest rate % * total payments - amount borrowed b. interest rate % * amount borrowed c. # payments * monthly payment - interest rate % * amount borrowed d. # of payments * monthly payment- amount borrowed
You are the loan department supervisor for a bank. This installment loan is being paid off early, and it is your task to calculate the rebate fraction, the finance charge rebate (in $), and the payoff for the loan (in $). (Round dollars to the nearest cent.) AmountFinanced Number ofPayments MonthlyPayment PaymentsMade RebateFraction FinanceChargeRebate LoanPayoff $1,700 18 $123.89 12
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Set Corporation is deciding which of two banks to borrow from on a 1-year basis. Bank A charges an 18 percent interest rate payable at maturity. Bank B charges a 17 percent interest rate on a discount basis. Which loan is cheaper and its effective interest rate? choose the letter of the correct answera. Bank A with 18%b. Bank B with 18%c. Bank A with 20.5%d. Bank B with 20.5%e. Both banks with 20.5%
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Toms UI IVesuTment to ychciut ed as a cost of borrowing to compensate the opportunity costs of the bank with I to the cash loaned to you. Moreover, the interest rate is usually expressed as nual percentage rate. activity ctions: On the space provided, write TRUE if the idea being expressed is correct and FALSE if otherwise. 1. In the most loan amortization schedules, amortization of discount or premium of the loan increases over time. 2. The process of obtaining future values is called discounting. 3. An annuity in which cash flows occur at the end of each period is called annuity. age
25. The following are features of personal loans offered by banks except A. fixed repayment tenure B. online loan application C. loan amount depends on monthly income D. affordable monthly installment
MCQs Just Required Correct Answers. 1- The amount which borrower has to pay to lender for taking and using his amount on total amount accumulated is called as _____________. a. Real rate of interestb. Nominal interest ratec. Nominal risk free interest rated. Compound interest 2- During the financial year 2019-20 OGDCL has earned huge profits and they have surplus funds available for making new investments. The top management after detailed discussion and analysis has decided to purchase the share of Hascol Company Ltd in a recent IPO. This decision of the management is called as ____________. a. Asset Management Decisionb. Investment Decisionc. Financing Decisiond. Equity Investment Decision 3- Which of the following DOES NOT belong to Over the Counter (OTC) market?a. Mostly Unlisted securities are tradedb. Network of dealersc. Less Participation of general publicd. No physical Location 4- Which of the following DOES NOT truly represent the characteristics of the…
Suppose you secure a home improvement loan in the amount of $5,000 from a local bank. The loan officer gives you the following loan terms:• Contract amount = $5,000• Contract period = 24 months• Annual percentage rate = 12%• Monthly installment = $235 .37Shown is the cash flow diagram for this loan. Construct the loan payment schedule by showing the remaining balance, interest payment, and principal payment at the end of each period over the life of the loan.
In cell B12, create a formula using the PMT function to calculate the monthly payments for loan Option A. Use the values in cells B8, B10, and B5 for the Rate, Nper, and Pv arguments, respectively, and do not enter any values for the optional arguments. Copy the formula you created in cell B12 into the range C12:D12.

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