If you purchase $27,000 in U.S. Treasury Bills with a discount rate of 4.2% for a period of 26 weeks, what is the effective interest rate? Round to the nearest hundredth percent.
Q: A proposed cost-saving device has an installed cost of $700,000. It is in Class 8 (CCA rate = 20%)…
A: Capital Cost Allowance: The capital cost allowance (CCA) is a deduction from an individual's or…
Q: WestJet Airlines is considering purchasing 20 new planes that will save the company $25 million per…
A: The annual savings of $25 million per year is like an annuity. We need to firstly find the present…
Q: manufactures and sells personal computers is an all- equity firm with 100,000 shares outstanding,…
A: In order to calculate the earning per share you considered the total number of outstanding share in…
Q: What is the equivalent value in period 4 of a series consisting of 11 yearly deposits of $8,000…
A: The equivalent value of the series in year 4 is calculated by compounding the present value of…
Q: According to Mr. Santos' calculations, he should invest the same amount in an asset with a risk-free…
A: A mix of multiple investment alternatives in which the investor puts in his funds is a portfolio. A…
Q: Gary wants to save $555,000 in 8 ears, he currently has $225,000 in an investment. Due to financial…
A: We will calculate interest rate using RATE function in excel for accurate results as nothing is…
Q: What is the total value of The Haus of Us? What is the price per share of common stock?
A: The total value of the firm is the PV of future FCF discounted at WACC. We can determine future FCF…
Q: (Related to Checkpoint 6.1) (Annuity payments) A firm borrows $20,000 from the bank at 13 percent…
A: Annual payment refers to an amount that is paid on yearly basis for the repayment of loan amount…
Q: what is the present value of XYZ Co.’s revenues?
A: We can determine the PV of each cash flow using the formula below: PV = Revenuen(1+r)n Where n =…
Q: Give typing answer with explanation and conclusion On January 1, the listed spot and futures…
A: As per the given information: Listed spot price on January 1 - 93.8Listed spot price one month later…
Q: A $1,000 bond originally issued at par maturing in exactly ten years bears a coupon rate of 8%…
A: Yield To Maturity: It represents the expected rate of return on the bond for the bondholders…
Q: You are advising a Brazilian telephone company which has a debt of $100 million U.S. dollars with a…
A: Debt financing is a type of financing where a company borrows money from lenders, usually in the…
Q: Ella Funt has been saving $5000 annually for the last 20 years and her account now totals $286,375.…
A: Interest rate Ella's account been earning is calculated in excel using Rate function with number of…
Q: Returns earned over a given time period are called realized returns. Historical data on realized…
A: Returns from trading an asset can be profits or losses. The return that one receives on an…
Q: nando issued a promissory note on July 29, 2019 to Metrobank amounting to Php 160,000 with interest…
A: Promissory Notes is a written negotiable instrument wherein a person is promised to pay a fixed sum…
Q: Comment on benefits and flaws of regulation as well as hypothesise main potential effects of new set…
A: Regulation refers to rules and guidelines that are established by government or other authorities to…
Q: The Digital Electronic Quotation System (DEQS) Corporation pays no cash dividends currently and is…
A: Present value is the estimation of the current value of future cash value which is likely to be…
Q: Q 3 and Q 4 combined: You are a trader (arbitrageur) at Platypus Capital (a hedge fund). You are…
A: Annual worth is helpful for the interpretation of the data for one year which shows the recovery…
Q: The Davidson Corporation's balance sheet and income statement are provided here. Davidson…
A: Stockholder's equity: It represents the assets remaining in a firm after all the debt obligations…
Q: A certificate of deposit usually has: Multiple Choice O O no set time period. a penalty for early…
A: Certificate of Deposit: It represents a savings product earning interest on the sum of the amount…
Q: Problem 2: A man deposited ABCDE.00 in a bank of 1D. E% per annum from January 10, 1999 to November…
A: We have; A=1B=5C=7D=6E=8 The amount deposited is ABCDE.00 i.e.15768.00 The annual Interest rate is…
Q: What if she had made the purchase with her credit card and paid off her bill in full promptly?…
A: Credit Card: It represents a product issued by the banks allowing the cardholders by paying for…
Q: Storico Co. just paid a dividend of $2.00 per share. The company will increase its dividend by 20…
A: The Dividend Discount Model (DDM) is a valuation method used to estimate the intrinsic value of a…
Q: Your client is considering purchasing stocks. The actual return of one o his choices follows here.…
A: Standard Deviation: It represents a measure of the dispersion of the data set that is in relation…
Q: The EPA rating of a car is 21 mpg. If the car is driven 1,000 miles in 1 month and the price of…
A: EPA rating = 12 mpg (Miles per gallon) Distance travel = 1000 miles Price of gasoline per gallon =…
Q: A $100,000 mortgage loan at 6.3% compounded semi-annually has a 25-year amortization period.…
A: A mortgage is a covered loan borrowed to purchase a property. The property itself acts as collateral…
Q: The price of a home is $150,000. The bank requires a 15% down payment. The buyer is offered two…
A: Mortgage payments are the monthly payments of the long-term loan taken from the lender. The borrowed…
Q: Calculate the annual interest that you will receive on the described bond. A $1500 Treasury bond…
A: A bond is a type of debt security issued by the government or business enterprises for raising funds…
Q: At the end of each quarter, a life insurance client deposits PhP 10,287 for 5 years. If money is…
A: The Future Value: The value of an investment at the end of the investment period is its future…
Q: What is the effective cost of the following combined loan? Loan amount 180,000 40,000 220,000 Term…
A: To find the effective cost of the combined loan, we need to first calculate the total amount…
Q: The Greenbriar is an all-equity firm with a total market value of $584,000 and 22,800 shares of…
A: The stock repurchase is a transaction where the company buys back its shares from the shareholders.…
Q: Marisa leases a car that has a purchase price of $63,500 with an MSRP of $66,950 and decided to…
A: The lease is the method of acquiring an asset without buying it, that is, the asset is acquired by…
Q: An investor is considering an investment that will pay $2,270 at the end of each year for the next…
A: Payment = p = $2270 Time = t = 10 years Interest rate = r = 12%
Q: ance the entre purchase at an annual rate of 13 pecent compounde 1 over the ide of the loan (Annuity…
A: Price of TV (PV) = $ 4000 Annual interest rate = 15% Monthly interest rate (r) = 15%/12 = 1.25%…
Q: Vrooom is a car dealership that determined the present value of its free cash flow to common equity…
A: Terminal value of dealership will be calculated using formula : Present value of terminal year =…
Q: Spacely Sprockets Inc is a new start-up evaluating a new project. They worry that they don't have…
A: There are different methods to evaluate investment projects. As a part of it, non-discounting…
Q: CMW Cola is a large mature firm with total assets of $50 billion, total equity value of $40 billion,…
A: The dividend discount model is a mathematical technique for forecasting the price of a business's…
Q: Melissa visits two competing banks. National Bank and Trust is offering a 5 year CD with an annual…
A: Future Value: It represents the expected worth of the present sum of the amount. It is estimated…
Q: You are eligible for a 30 year fixed rate home mortgage with an interest rate of 3.6% per year. If…
A: Here, Time Period of Loan (n) is 30 years Interest Rate of Loan (r) is 3.6% Monthly Payment (PMT) is…
Q: assume a $175,000 mortgage loan and 10-year term. The lender is charging an annual interest rate of…
A: For an amortized loan with level payments, the monthly payment needs to be determined first.…
Q: Give typing answer with explanation and conclusion Which of the following statements is CORRECT?…
A: Timelines are a useful tool for understanding the timing and magnitude of cash flows and can be used…
Q: Consider a one-year, 5-percent coupon bond with a face value of $100 issued by a Seabass…
A: A bond is a type of debt security issued by the government or business enterprises for raising funds…
Q: e. Assume the firm’s after-tax cost of capital is 10.5%. What is the firm’s 2018 EVA? f. Assume…
A: Note: This post has several sub-parts. Parts e and f have been answered since it has been…
Q: Yosemite Corporation has an outstanding debt of $10.03 million on which it pays a 5 percent fixed…
A: Step 1 The difference between interest receipts and interest outlays is referred to as net interest…
Q: 5. Pathao, a ride sharing company, is interested in estimating its weighted average cost of capital…
A: WACC refers to weighted average cost of capital. WACC shows the after tax cost of capital from…
Q: Can a derivative security's value be determined by an underlying single stock (e.g., IBM, MMM, GE)?…
A: Futures and forwards are financial contracts that are used to buy or sell an underlying asset at a…
Q: The next dividend payment by Im, Incorporated, will be $3.25 per share. The dividends are…
A: Required return on stock is calculated using following equation Required return = D1P0+g Where, D1…
Q: Historically, Treasury bills offered higher rates. On January 2, 2007, the discount rates were…
A: A treasury bill is a kind of debt security issued by the government and private companies for…
Q: Find the amount (in $) of interest and the maturity value of the loans. Use the formula MV = P + I…
A: A loan is a financial product that involves borrowing money from a lender with the agreement to…
Q: A scholarship fund is to be set up to provide monthly scholarship of $840. If the first payment is…
A: Present value is the estimation of the current value of future cash value which is likely to be…
| interest | = | face value ✕ discount rate ✕
|
||
| = | $27,000 ✕ ✕
|
|||
| = | $ |
Step by step
Solved in 3 steps
- Treasure bills (T-bills) are used by the U.S. Treasury Department to finance the public debt. Suppose a 180-day T-bill with a maturity value of $10,000 is purchased for $9,885.56. What annual simple interest rate is earned on this T-bill? (Answer as a percentage rounded to three decimal places.) I = PRT, A = P+IA promissory note is a written statement agreeing to pay a sum of money either on demand or at a definite future time. When a note is purchased for its present value at a given interest rate, the note is said to be discounted and the interest rate is called the discount rate. Suppose a $10,000 note due 7 years from now is sold to a financial institution for $5600. What is the nominal discount rate with quarterly compounding? The nominal rate is %. (Type an integer or decimal rounded to two decimal places as needed.)a. A one-year treasury bill with a face value of $1 million has a nominal interest rate of 0031% if its purchase price is $985,000 and a nominal interest rate of % if its purchase price is $970,000. Enter your responses rounded to 1 decimal place. b. To raise the nominal interest rate on treasury bills the Bank of Canada can adjust supply in its auction of bills through a(n) increase in how many bills it sells at the auction. c. To raise the nominal interest rate on treasury bills the Bank of Canada can also adjust its own purchases in the auction of treasury bills through a(n) [decrease in how many bills it buys at the auction.
- 4. On 1/1/21 we sell equipment and accept a 3-year note receivable for $36,500. The market value is $36,500. Payments of $13,655 include both principal and interest and are to be made annually starting on 1/1/22. The present value of the payments is $36,500. The bank would require the purchaser to pay interest of 6% in order to borrow from them. The equipment cost us $90,000 and had a book value of $40,000. Note: Be sure to show the date of each journal entry. The 'right' journal entry on the 'wrong' date is wrong. a. Prepare an amortization table b. Prepare the journal entry for 1/1/21 c. Prepare the journal entry for 12/31/21 d. Prepare the journal entry for 1/1/22 Amortization table: Journal entries: Debits Credits 1/1/21 12/31/21 1/1/22To payoff a loan of $1000 you need to make 40 payment of $36.56 per month. What rate of interest are you paying? What is the stated or quoted rate? What is the annual percentage rate? What is the effective annual rate? What rate is bank likely to use to state its rate?First America Bank’s monthly payment charge on a 48-month, $20,000 loan is $568.26. The U.S. Bank’s monthly payment fee is $577.70 for the same loan amount. What would be the APR for an auto loan for each of these banks? (Use Table 14.1.) Note: Round your final answers to the nearest hundredth percent. APR First America Bank between % and % U.S. Bank between % and % TABLE 14.1 ANNUAL PERCENTAGE RATE NUMBER OF PAYMENTS 10.00% 10.251% 10.50% 10.75% 11.00% 11.25% 11.50% 11.75% 12.00% 12.25% 12.50% 12.75% 13.00% 13.25% 13.50 13.75% (FINANCE CHARGE PER $100 OF AMOUNT FINANCED) 1 0.83 0.85 0.87 0.90 0.92 0.94 0.96 0.98 1.00 1.02 1.04 1.06 1.08 1.10 1.12 1.15 2 1.25 1.28 1.31 1.35 1.38 1.41 1.44 1.47 1.50 1.53 1.57 1.60 1.63 1.66 1.69 1.72 3 1.67 1.71 1.76 1.80 1.84 1.88 1.92 1.96 2.01 2.05 2.09 2.13 2.17 2.22 2.26 2.30 4 2.09 2.14 2.20 2.25 2.30 2.35 2.41 2.46 2.51 2.57 2.62 2.67 2.72 2.78 2.83 2.88 5 2.51 2.58 2.64 2.70 2.77 2.83 2.89…
- Suppose that you owe $2,000 on a credit card that charges 18% APR and you pay either the minimum 10% or $20, whichever is higher, every month. How long will it take you to eliminate the debt? Assume that the bank uses the previous-balance method to calculate your interest, meaning that the bank does not subtract the amount of your payment from the beginning balance but charges you interest on the previous balance.A payday lender lends money on the following terms: “If I give you $100 today, you will write me a check for $120, which you will redeem or I will cash on your next payday.” Noting that calculated rates would be even higher for closer paydays, assume that the payday is two weeks away. (a) What nominal interest rate per year (r) is the lender charging? (b) What effective interest rate per year (ia) is the lender charging? (c) If the lender started with $100 and was able to keep it, as well as all the money received, loaned out at all times, how much money does the lender have at the end of one year?Because simple interest is used on short-term notes, the time period is often given in days rather than months or years. We convert this to years by dividing by 360, assuming a 360 day year called a banker's year. 1. T-bills (Treasury bills) are one of the instruments the U.S. Treasury Department uses to finance public debt. If you buy a 210-day T-bill with a maturity value of $18,750 for $18,307.34, what annual simple interest rate will you earn? Express your answer as a percentage. %. Round to the nearest thousandths of a percent (3 decimal places). 2. To complete the sale of a house, the you accept a 320-day note for $8,000 at 9% simple interest. (Both interest and principal are repaid at the end of the 320 days.) Wishing to use the money sooner for the purchase of another house, the you sell the note to a third party for $8,116 after 40 days. What annual simple interest rate will the third party receive for the investment? Express your answer as a…
- 5. If this loan had been made on a 10% add-on basis payable in 12 end-of-month installments, that would be the monthly payments? What is the annual percentage rate? The effective annual rate? ($45,833.33, 17.97%, 19.53%) E • How does the cost of costly trade credit generally compare with the cost of shortterm bank loans? L Focus F9 F10 F11 F12 8 9Use a bankers year: 360 T-bills (Treasury bills) are one of the instruments the U.S. Treasury Department uses to finance public debt. If you buy a 200-day T-bill with a maturity value of $17,750 for $17,564.46, what annual simple interest rate will you earn? Express your answer as a percentage.A bank is considering using a “three against six” $2,000,000 FRA to cover its potential loss. The purpose of the FRA is to cover the interest rate risk caused by the maturity mismatch from having made a six-month Eurodollar loan and having accepted a three-month Eurodollar deposit. The agreement rate with the buyer is 4.6%. There are actually 92 days in the three-month FRA period. Assume 360 days a year, which one of the following statements is incorrect? Group of answer choices To hedge the risk caused by maturity mismatch, the bank could take the buyer’s position if it uses the Euro-Dollar Interest Rate Futures instead. If the settlement rate is 4.8% three months from today, then the buyer pays the seller. If the settlement rate is 4.8% three months from today, then the FRA is worth $1009.84 To hedge the loss caused by maturity mismatch, the bank should be a seller of the FRA. Without the FRA, the bank will lose if the market interest rate…