Alpha and Beta Companies can borrow for a five-year term at the following rates: Alpha Beta Moody's credit rating Aa Fixed-rate borrowing cost 9.6% Floating-rate borrowing cost LIBOR LIBOR + 1% If there is a swap bank involved and earns 20% of the swap's total benefit. Alpha wants to borrow through floating debts and desires 70% of the total benefit from the swap, and Beta takes the rest of the swap benefit. What is the all-in-cost for Beta through the swap? (if your answer is 10.1% . just enter "10.1"). Baa 12.7%

Alpha and Beta Companies can borrow for a five-year term at the following rates: Alpha Beta Moody's credit rating Aa Fixed-rate borrowing cost 9.6% Floating-rate borrowing cost LIBOR LIBOR + 1% If there is a swap bank involved and earns 20% of the swap's total benefit. Alpha wants to borrow through floating debts and desires 70% of the total benefit from the swap, and Beta takes the rest of the swap benefit. What is the all-in-cost for Beta through the swap? (if your answer is 10.1% . just enter "10.1"). Baa 12.7%

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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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?
The Assured Independence Bank has offered to lend you $200,000 on a line of credit. Interest is charged at 11% and there is a commitment fee of $500. If the payment terms are 2/10 n45 what is the cost of this loan? Express the cost of this option as a simple interest rate (%+2 decimal places).
Find the annual financing cost of a 45 day revolving credit agreement with a 0.5% commitment fee. Assume you borrow $377,863m at 5.96%. You can borrow up to $500,000. b.Find the annual financing cost (AFC) or a 30 day line of credit where the bank requires a 10% compensating balance requirement. Assume you borrow $211,895m at 5.39% and you have $20,000 in the bank.
You are taking out a single-payment loan that uses the simple interest method to compute the finance charge. You need to figure out what your payment will be when the loan comes due. The equation to calculate the finance charge is: FsFs = Amount of Loanx Interest Ratex Term of Loan where FsFs is the finance charge for the loan, and the term of the loan is in . You’re borrowing $10,000 for two years with a stated annual interest rate of 6%.
Consider two loans with a 1-year maturity and identical face values: a(n) 8.3% loan with a 0.99% loan origination fee and a(n) 8.3% loan with a 4.9% (no-interest) compensating balance requirement. Which loan would have the higher effective annual rate (EAR)? Why? The EAR in the first case is %. (Round to one decimal place.)
Your company is considering three options for financing its short term operations Borrow Tk.20 million from Shuktara Bank at 12 percent interest rate and a 15 percent compensating balance requirement signing a 60 day promissory note. Borrow Tk.20 million from Chandramukhi Bank at 12 percent discount interest. Forego discount on a trade credit on terms 2/15, net 45. Strictly based on effective cost, which option would you select and why?
In order to borrow $100,000 for a 5% loan on a discount loan basis with a 5% compensating balance; the firm will actually have to borrow?
= Consider two loans with one-year maturities and identical face values: a(n) 8.4% loan with a 1.03% loan origination fee and a(n) 8.4% loan with a 4.5% (no-interest) compensating balance requirement. Which loan would have the higher effective annual rate? Why? The EAR in the first case is%. (Round to one decimal place.) er cl
Compare the monthly payments and total loan costs for the following pairs of loan options. Assume that both loans are fixed rate and have the same closing costs. You need a $200,000 loan. Option 1: a 30-year loan at an APR of 7.5%. Option 2: a 15-year loan at an APR of 7%. Find the monthly payment for each option. The monthly payment for option 1 is S The monthly payment for option 2 is S (Do not round until the final answer. Then round to the nearest cent as needed.)
A mortgage borrower has an outstanding debt at interest rate of J12= 15% and 1050 TL monthly payments for 69 months remaining today. Another bank is offering the same monthly payments but for 63 months only at a lower interest rate. For the refinancing, borrower has to pay 1600 TL expense today. Decide if the borrower should refinance the debt or not by showing the difference of discounted values of two alternatives.
For a bank loan assuming a one-year repayment period and 14% interest, the monthly payment is S (Round to the nearest cent.) For a bank loan assuming a one-year repayment period and 14% interest, the total cost is $ (Round to the nearest cent For the add-on loan method with one year repayment period and 12% interest, the monthly payment is S (Round to the nearest cent.) For the add-on loan method with one-year repayment period and 12% interest, the total cost is S (Round to the nearest cent If Shirley pays the bank loan back after six months, she will save"S (Round to the nearest cent) If Shirley pays the add-on loan back after six months, she will receive a rebate
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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