400:49:38Your firm has an average collection period of 38 days. Current practice is to factor allreceivables immediately at a discount of 1.9 percent. Assume that default is extremelyunlikely. What is the effective cost of borrowing? (Do not round intermediatecalculations and enter your answer as a pecent rounded to 2 decimal places, e.g.,32.16.)Effective cost of borrowing19.82 % 5ts00:50:01SkippedeBookHintPrinteferencesSexton Corporation has projected the following sales for the coming year:Q1Q2Q3Q4Sales $970 $1,050 $1,010 $ 1,110Sales in the year following this one are projected to be 15 percent greater in eachquarter.a. Calculate payments to suppliers assuming that the company places orders duringeach quarter equal to 30 percent of projected sales for the next quarter. Assume thatthe company pays immediately. (Do not round intermediate calculations and roundyour answers to 2 decimal places, e.g., 32.16.)b. Calculate payments to suppliers assuming a 90-day payables period. (Do not roundintermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)c. Calculate payments to suppliers assuming a 60-day payables period. (Do not roundintermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)a. Payment of accountsb. Payment of accountsc. Payment of accountsQ1Q2Q3Q4

“Since you have posted multiple questions, we will provide the solution only to the first question…

Your firm has an average collection period of 38 days. Current practice is to factor all receivables immediately at a discount of 1.9 percent. Assume that default is extremely unlikely. What is the effective cost of borrowing? (Do not round intermediate calculations and enter your answer as a pecent rounded to 2 decimal places, e.g., 32.16.) Effective cost of borrowing 19.82 %

Your firm has an average collection period of 38 days. Current practice is to factor all receivables immediately at a discount of 1.9 percent. Assume that default is extremely unlikely. What is the effective cost of borrowing? (Do not round intermediate calculations and enter your answer as a pecent rounded to 2 decimal places, e.g., 32.16.) Effective cost of borrowing 19.82 %

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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Plz don't use excel.
A bank makes a loan of $1,000,000 at a rate of 6% p.a. It also requires a compensating balance of 5%. What is the effective cost to the borrower?
A bank has estimated its expected (predicted) loan loss rate on its consumer loans at 3.25%. If the bank wishes to earn 8% on it consumer loans, what rate should it charge its customers?
Little Kimi Clothiers can borrow from its bank at 18 percent to take a cash discount. The terms of the cash discount are 2/18 net 55. a. Compute the cost of not taking the cash discount. (Use 365 days in a year. Do not round the intermediate calculations. Round the final answer to 2 decimal places.) Cost of not taking a cash discount b. Should the firm borrow the funds? % Yes ○ No
A loan has quarterly payments. The APR is 16%, and interest is compounded 12 time(s) per year. The effective interest rate that would be needed to find the payment amount for the loan is _%. Margin of error for correct responses: +/-.02 (%) Rounding and Formatting instructions: Do not enter dollar signs, percent signs, commas, X, or any words in your response. Do not round any intermediate work, but round your *final* response to 2 decimal places (example: if your answer is 12.3456, 12.3456%, or $12.3456, you should enter 12.35).
am. 44.
Rounding in the calculation of monthly interest rates is discouraged. Such rounding can lead to answers different from those presented here. For long-term loans, the differences may be pronounced.Assume that you take out a $4000 loan for 30 months at 8% APR. How much of the first month's payment is interest? (Round your answer to the nearest cent.)$
es Little Kimi Clothiers can borrow from its bank at 20 percent to take a cash discount. The terms of the cash discount are 3/25 net 85. a. Compute the cost of not taking the cash discount. (Use 365 days in a year. Do not round the intermediate calculations. Round the final answer to 2 decimal places.) Cost of not taking a cash discount b. Should the firm borrow the funds? % 00 Yes O No
National Savings Bank offers money market accounts with varying interest rates, depending on the balance in the account. For accounts under $10,000, the interest rate is 2.5%; accounts between $10,000 up to and including $25,000 have an interest rate of 3.25%; accounts over $25,000 earn an interest rate of 5%. Write a piecewise function R for the interest earned on an account with x dollars.
Acacia Bank expects the euro to depreciate against the dollar and plans to take a short position in euros and a long position in dollars. Assume the following1. Interest rate on borrowed euros is 5 percent annualized2. Interest rate on dollars loaned out is 6 percent annualized3. Spot rate is 0.90 per dollar4. Expected spot rate in ten days is 0.95 per dollar5. Acacia Bank can borrow 10 millionDescribe the steps Acacia should take to profit from shorting euros and going long on dollars, show your calculations.
A financial institution uses a loan base rate of 4.35% and sets the credit risk premium at 6.68%. The institution charges a 1.5% loan origination fee and imposes 3.22 % compensating balances. The required reserves for this institution are 10%. Additionally suppose your institution specifies the following linear probability model to estimate the probability of default: PD = Bo - Bi Wealth-B2Credit Score + B3 Number of Bankruptcics Bo = 10, 109.5 %3D B1 = 0.10 %3D B2 = 0.20 %3D B3 = 0.60 %3D Use the information above to answer the question. What is the gross rate of return on the loan? O 9.31% O 11.03% O 12.53% O 12.90%
Your company is considering three options for financing its short term operations i. Borrow Tk.25 million from Shuktara Bank at 15 percent interest rate and a 20 percent compensating balance requirement signing a 60 day promissory note. ii. Borrow Tk.25 million from Chandramukhi Bank at 15 percent discount interest. i. Forego discount on a trade credit on terms 3/10, net 50. Strictly based on effective cost, which option would you select and why?

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