Will the fund at the end of 15 years be sufficient to retire the bonds? If not, what will the deficiency be?
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Bonita Corporation, having recently issued a $20,062,200, 15-year bond issue, is committed to make annual sinking fund deposits of $620,000. The deposits are made on the last day of each year and yield a return of 10%. Will the fund at the end of 15 years be sufficient to retire the bonds? If not, what will the deficiency be?
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- A city has issued bonds to finance a new convention center. The bonds have a total face value of $3,000,000 and are payable in 8 years. A sinking fund has been opened to meet this obligation. If the interest rate on the fund is 6.7% compounded quarterly, what will be the quarterly payments? (Round your final answer to two decimal places.)The Omega Venture Group needs to borrow to finance a project. Repayment of the loan involves payments of $880 at the end of every month for five years. No payments are to be made during the development period of six years. Interest is 9% compounded quarterly. (a) How much should the Group borrow? (b) What amount will be repaid? (c) How much of that amount will be interest? a) The Group should borrow $ (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) b) The amount that will be repaid is $ (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) c) The amount of interest will be $ (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.).A company plans to make four annual deposits of $4,250 each to a special building fund. The fund's assets will be invested in mortgage instruments expected to pay interest at 12% on the fund's balance. Determine how much will be accumulated in the fund after four years under each of the following situations: 1. The $4250 annual deposit are made at the end of each of the four years and interest is compounded annually. 2. The $4250 annual deposit are made at the beginning of each of the four years and interest is compounded annually. 3. The $4250 annual deposit are made at the beginning of each of the four years and interest is compounded quarterly. 4. The $4250 annual deposit are made at the beginning of each of the four years interest is compounded annually, and interest earned is withdrawn at the end of each year.
- 1. 2. (a) Your company is required to pay into a sinking fund each year in order to meet an obligation which matures in 10 years. The amount of the obligation is Tshs 100,000,000 and you can earn 4% on your deposits. How much must your company deposit each year in order to meet these needs? (b)Your uncle lends you Tshs 10,000/- today with the promise that you pay him back Tshs 17,280/- in three years. What rate of interest is he charging? 3. (a)What kind of cash flows do investors expect from their investment in government bonds? (b)What role does bond indenture plays in a bond investment? (c)Assume that a company listed on the Sunrise Stock Exchange expects to pay dividends amounting to 100 shillings per share next year, shillings 200 in the year that follows and 250 shillings in the following year. After that, dividends are expected to grow at constant 5% per year. If the required rate of return is 10%, what price should investors pay for such shares today? Suppose a firm is…Titusville Petroleum Company is considering pledging its receivables to finance an increase in working capital. Citizens National Bank will lend the company 85 percent of the pledged receivables at 3 percentage points above the prime rate (currently 6%). The bank charges a service fee equal to 1.4 percent of the pledged receivables. The interest costs and the service fee are payable at the end of the borrowing period. Titusville has $2 million in receivables that can be pledged as collateral. The average collection period is 40 days. Assume that there are 365 days per year. Determine the annual financing cost to Titusville of this receivables-backed loan. Round your answer to two decimal places. %A company has decided to issue a 120-day bank-accepted bill to raise additional funding of $250 000 to buy equipment. If the bank has agreed to discount the bill at a yield of 7.65% per annum, what will be the face value of the bill?
- The Zander Corporation wishes to accumulate $2,000,000 for plant expansion. The funds are required on December 31, 2025. Zander intends to make five equal annual deposits at the beginning of the year in a fund that will earn interest at 8% compounded annually. The first deposit was made on January 1, 2021. What is the amount of the required annual deposit? The required annual deposit is (round up to the nearest dollar):6. A company wishes to borrow $7500 000 for 8 years. One source will lend the money at j2 = 9% if it is amortized by semi-annual payments. A second source will lend the money at j2 returned in a lump sum at the end of 5 years. If the second source is used, in order to pay back thel principal, a sinking fund will be established by semi-annual deposits that accumulate at j2 = 3.9%. = 7.6% if only the interest is paid semi-annually and the principal is (a) What is the semi-annual cost under the amortization plan? (b) What is the semi-annual cost under the sinking fund plan? (c) Which plan should the company choose, and how much can they save semi- annually by using the better plan?(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?
- Ranger Enterprises is considering pledging its receivables to finance a needed increase in working capital. Its commercial bank will lend 70 percent of the pledged receivables at 2.5 percentage points above the prime rate, which is currently 10 percent. In addition, the bank charges a service fee equal to 2 percent of the pledged receivables. Both interest and the service fee are payable at the end of the borrowing period. Ranger’s average collection period is 55 days, and it has receivables totaling $7 million that the bank has indicated are acceptable as collateral. Calculate the annual financing cost for the pledged receivables. Assume that there are 365 days per year. Round your answer to two decimal places. %A company is considering an iron ore extraction project that requires an initial investment of $1,200,000 and will yield annual cash inflows of $534,283 for three years. The company's discount rate is 9%. Calculate IRR. Present value of ordinary annuity of $1: 10% 12% 14% 15% 16% 18% 20% 1 0.909 0.893 0.877 0.870 0.862 0.847 0.833 1.736 1.690 1.647 1.626 1.605 1.566 1.528 3 2.487 2.402 2.322 2.283 2.246 2.174 2.106 4 3.170 3.037 2.914 2.855 2.798 2.690 2.589 OA. 16% OB. 15% D OC. 14% O OD. 18%BBC borrows a 19-year loan of $12,122 at 8% to finance a project. The corporate tax rate is 33%. If BBC is required to repay 1/5 of the loan at the end of year 7 and the remaining balance at the end of year 19, what is the net present value of this debt financing
