Answered: what is the present value of XYZ Co.’s…

Business

Finance

what is the present value of XYZ Co.’s revenues?

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter13: Other Financing Alternatives

Section: Chapter Questions

Problem 1bM

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Provide step by step manula solution, formula, and diagram. An investor have a projected surplus income of P1000 per year which he plans to place in a bank which offers an interest of 18% per annum for time deposit over 5 years. Compute how much shall the investor collect at the end of 13 years
Provide step by step manual solution, formula(s), and diagram the below given problem. An investor have a projected surplus income of P1000 per year which he plans to place in a bank which offers an interest of 18% per annum for time deposit over 5 years. Compute how much shall the investor collect at the end of 13 years.
A bank has made a 3-year $10 million dollar loan that pays annual interest of 8%. The principal is due at the end of the third year. A. The bank is willing to sell this loan with recourse at 8.5% discount rate. What should it expect for selling this loan? B. It also has the option of selling this loan without recourse at a discount rate of 8.75%. What should it expect for selling this loan? C. If the bank expects a ½% probability of default on this loan, is it better off selling this loan with or without recourse? It expects to receive no interest payments or principal if the loan is defaulted. D. Why do you think that the interest rate in part A is different from the interest rate in part B?
(b) Suppose that you took out PTPTN loans totalling RM24000 with interest of 1% per year. You have an online payment plan which deducts savings from your bank account at a rate of RM100 per month. (Hint: Assume that the rate is evaluated based on the current balance of the loan.) (1) Write the initial value problem for the situation above. State all variables and the quantities they represent.
A businessman needs P500,000 for his operations. One financial institution is willing to lend him the money for one year at 12.5% interest per annum (discounted). Another lender is charging 14%, with the principal and interest payable at the end of one year. A third financer is willing to lend him P500,000 in 12 equal monthly instalments of P46,000. Which offer is best for him?
You have been assigned to estimate the interest rates that your company may have to pay when borrowing money in the near future. The following information is available.kPR = 2%MR = 0.1% for a 1 year loan increasing by 0.1% for each additional yearLR = 0.05% for a 1 year loan increasing by 0.05% for each additional yearDR = 0 for a 1 year loan, 0.2% for a 2-year loan, increasing 0.1% for each additional yearExpected Inflation Rates Year 1 = 7% Year 2 = 5% Year 3 and thereafter = 3% a. Calculate the inflation adjustment (INFL) for a 5-year loan. b. Calculate the appropriate interest rate for a 5-year loan.
if a bank has 100Mn loan, 200Mn deposit, 10Mn capital and 100Mn investment in Government bond, the deposit promises a yearly return of 4% for the next 30 years and the bond promises YTM of 0.5% . How would you createthe balance sheet of the bank? Would you incorporate the future value of the loans on the balance sheet or only the nominal values assuming that you look at the balance sheet today
Wasup Corp. is thinking of borrowing $190,000 from its bank at 8% annual interest rate. The amount that will be repaid is $325,626. Assume annual compounding. In approximately how many years will Wasup Corp. need to repay the loan? Use the future value of $1 factor table shown below.Excerpt of Future Value of $1 Table Periods 7% 8% 9% 1 1.07000 1.08000 1.09000 2 1.14490 1.16640 1.18810 3 1.22504 1.25971 1.29503 4 1.31080 1.36049 1.41158 5 1.40255 1.46933 1.53862 6 1.50073 1.58687 1.67710 7 1.60578 1.71382 1.82804 Group of answer choices 7 years 4 years 6 years 5 years
1. Calculate the future value of $9,000 invested (single amount) for ten years in an account with an APR of 6.3%. (Do not round interest rates.) a. If compounded annually? Future value = P (1+r)t 9,000(1+0.063)¹⁰= b. If compounded semiannually? c. If compounded monthly? d. Given equal rates, time, and investment amount, what effect does the frequency of compounding have on future values? What effect does the frequency of discounting have on present values? 2. Determine the rate that would be earned on a $25,000 investment if $100,000 is paid back in 25 years. Based on your answer, what factors would you consider in whether to invest or not. 3. A company has a $400 million liability that is due in 20 years. If the relevant discount rate is 5.25 percent, what is the present value of the liability? 4. What is the present value of an investment that will pay you $75 per year forever if the appropriate rate of return is 3%?
The time value of money is used for many important financial decisions that could affect long-term goals. The interest rate you pay on a loan can affect the amount you pay each period. An advertised monthly lending rate of 9% is about 11% per year. This difference between an advertised rate and the annualized rate is based on finer TVM details that may be overlooked by borrowers. What practical TVM application would you expect to encounter in your future? Explain.
2) Solve the following NPV problems: Problem 1 . Suppose that a borrower receives a 1,000 euro loan from Bank A, with a 10-year maturity at an annual interest rate of 5% with the obligation to pay the interest at the end of each year for the next 10 years. However, at the end of the 6th year, due to financial difficulties, he borrows from the same bank an additional 1,000 euros at an annual interest rate of 5% making the following agreement: a. not to pay any installment at the end of the next two years, i.e. the 7th and 8th year, and b. then pay an equal amount of interest for the next 8 years (i.e. from the end of the 9th year until the end of the 16th year) in order to fully repay the first as well as the second loan. It is requested to calculate the interest-rate installment of the loan that occurred after the restructuring. Problem 2. Suppose that parents make family planning to finance their child's studies and buy a car. The expected costs for studies are EUR 10 000 per year…
Suppose a business takes out a GHC5000, 5-year loan at 9%. If the loan agreement calls for the borrower to pay the interest on the loan balance each year and to reduce the loan balance each year by GHC 1000, what would the loan repayment schedule look like?