Q 12 A loan is offered with monthly payments and a 16.25 percent APR. What’s the loan’s effective annual rate (EAR)? (Do not round intermediate calculations and round your final answer to 2 decimal places.) EFFECTIVE ANNUAL RATE?

Q: Health Supplement Inc. Nutritional supplements provide nutrients, which may not be ingested in…

A: Machine X Initial cost is $18000 Annual savings are of $3,000 Machine Y Initial cost is $15000…

Q: A business issued $1,000,000 worth of 10-year bonds in the form of $1,000 units. 8% interest is paid…

A: Bond High-security debt instruments that help businesses raise capital are called bonds. Bonds are…

Q: The size of the replacement payment is $ (Round to the nearest cent as needed. Round all…

A: We first need to find the FV of the loan that was due 3 months ago using the formula below FV1900 =…

Q: What is a leveraged buyout? It is a type of joint venture. It is an…

A: concept. A buyout is the acquisition of a controlling interest in a company Buyouts occur when a…

Q: You expect to deposit the following cash flows at the end of years one (1) through to five (5), $1,…

A: Future Value refers to the compounded value of a single cash flow received today or multiple cash…

Q: Consider the following information: Economy Probability of State of Economy Rate of Return if State…

A: Expected return = Probability * Return   Variance = Sum of( Squared deviation between return and…

Q: Queen, Inc., has a total debt ratio of 0.11. What is its equity multiplier?

A: Equity Multiplier = 1 / (1 - Debt ratio)

Q: A car dealer carries out the following calculations. What is the annual percentage rate? List price:…

A: Using the information given, we have to find the annual percentage rate (APR), the loan is subjected…

Q: The cost of preferred stock is ________. A) lower than the cost of long-term debt. B) higher than…

A: As per Bartleby honor code, when multiple questions are asked, the expert is required only to solve…

Q: Match the terms to the description Time Value of Money (TVM) Discounting Present Value (PV) Future…

A: The time value of money concept explains how money becomes less valuable with the passage of time.…

Q: A company issued 20-year bonds with par value $1,000 two years ago at a coupon rate of 5 percent.…

A: Given: Particulars Amount Years 20 Face value $1,000 Coupon rate 5% Yield to maturity 4%

Q: Consider the following information about the various states of economy and the returns of various…

A: State of the economy Probability T-Bills Philips Pay-up Rubber-Made Market Index Recession 0.2 7%…

Q: AR company has the following financial statement information:  Item Beginning($)   Ending($)…

A: Average = Opening (Beginning) + Closing (Ending) / 2   Average Inventory = (7800 + 10,200) / 2 =…

Q: On January 1, 2003 Mike took out a 30-year mortgage loan in the amount of 200,000 at an annual…

A: Given: Particulars Amount Loan amount $200,000 Interest rate 6% Year 30     Repaid…

Q: There was an example of having a hedge fund with 100 million dollars. If you insured a one billion…

A: A leverage ratio is any of many financial indicators that assess a company's ability to meet its…

Q: You want to value a call option on Google stock (which does not pay dividends) with a strike price…

A: We have to price the call option on a non dividend paying stock. This can be done using Black…

Q: The two most pressing demands for liquidity from a bank come from, first, customers withdrawing…

A: Liquidity in banking refers to the capacity or the ability of the banks to give cash to customers on…

Q: You are considering investing $10,000 in either U.S. Treasury bills or bank certificates-of-deposits…

A: U.S. Treasury bills are backed by the US Government. CDs issued by banks are backed by Federal…

Q: b) Compute the cash flow from assets for the project. (c) Describe two other measures besides NPV…

A: Capital budgeting Decisions related to long-term investments are called capital budgeting decisions.…

Q: 9. Hansco borrowed $9200 paying interest at 11% compounded annually. If the loan is repaid by…

A: Given: Loan amount = $9,200 Interest rate = 11% Payment = $2,000

Q: Prestige Retailers Ltd is a retail company registered in the stock market. The company has just paid…

A: Given, Annual dividend paid is R5 per share Growth rate upto 3 years is 10%

Q: Fidelity Life Insurance has a document imaging system that needs replacement. A local salesperson…

A: Payback period is period required to recover initial investment in the projects based on the…

Q: Assume I won 8 million dollars in a lottery.  I could take my winnings in installments of 2 million…

A: The PV of future cash flows is used to determine the worth of the cash flows today after they have…

Q: Recently, More Money 4U offered an annuity that pays 5.1% compounded monthly. If $1,706 is deposited…

A: Monthly deposit (C) = $1,706 Monthly interest rate (r) = 0.00425 (i.e. 0.051 / 12) Monthly period…

Q: Suppose Ted deposits $10,000 in a savings plan earning 5% compounded annually and Tess deposits…

A: Future value  The value of the current investment on a future date is called the future value. The…

Q: some true or false questions about the apt: a. the apt factors cannot reflect diversifiable risks.…

A: a) The Apt factors cannot reflect diversifiable risks. Arbitrage Pricing Theory states that assets’…

Q: Suppose a PE/VC fund has $283 million in capital and the fund is looking to take advantage of…

A: The capital call or drawdown, where whenever the need arises, a general partner (called GP) collects…

Q: A packaging employee making $18 per hour can package 90 items during that hour. The direct material…

A: Solution:- Total direct cost means the cost incurred on the direct factors of production i.e. direct…

Q: Test 2: Risk Management Name: Surname: Group: Give detailed solutions in the spaces provided s to…

A: Expected loss is mean loss based on the probability of each loss. Standard deviations show how much…

Q: Not having a credit may result in having a hard time finding an apartment. False True 199 What's the…

A: Several multiple choice questions appear on the screen. We have to find the correct answer for each…

Q: Explain how cash flows are esrimated for captial budgeting. What are sunk costs and opportunity…

A: Capital budgeting is an important aspect of finance. It is the process through which a company…

Q: &Your parents are planning to set a trust fund for you when you become 18 years old. They want you…

A: Interest rate The rate of return obtained from the investment or the interest rate the borrower pays…

Q: The NOI for a small income property is expected to be $153,900 for the first year. Financing will be…

A: We have the NOI and debt parameters for a small income generating property. We have to find the PV…

Q: What would the future value of $125 be after 8 years at 8.5% compound interest? a. $205.83 b.…

A: To caculate the future value we will use the below formula   Future value = P*(1+r)n Where P -…

Q: you buy a put option contract on Tesla Inc, with the most heavily traded strike price today. What…

A: Options are very good derivative products and by payment of small premium you get right to sell or…

Q: Your friend is ready to make an offer on a 2500 sq. ft. home that is priced at $485,000. She…

A: Prices of homes varry from area to area and also depends on the size and other related…

Q: Suppose the expected return on the tangent portfolio is 10% and its volatility is 40%. The risk-free…

A: The CML is a special case of Capital Allocation line where the risky portfolio is the market…

Q: What is the future value of a $980 annuity payment over six years if interest rates are 10 percent?…

A: Annual payment (C) = $980 Interest rate (r) = 0.10 Period (n) = 6 years Future value = ?

Q: STATEMENT BALANCE. Your credit card statement period CLOSES on the 1st of every month and a new…

A: Statement close date, billing date and payment due dates have been specified. We have to find the…

Q: ________ are promised a fixed periodic dividend that must be paid prior to paying any common stock…

A: As per Bartleby honor code, when multiple questions are asked, the expert is required only to solve…

Q: The part of finance concerned with design and delivery of advice and financial products to…

A: Finance is the amount of money needed to run a business. Finance is the study of banking, capital…

Q: 1) Please indicate whether the following statements are true or false. In case of a false statement,…

A: As per our guidelines we are supposed to answer only one question (if there are multiple questions…

Q: 1.Describe the components included in weighted average cost of capital. How do you determine a…

A: WACC or weighted average cost of capital is an important metric in finance. We often use WACC in…

Q: Required: (a) Assess the viability of these two projects using NPV and Payback period  as the…

A: NPV or the net present value = Present value of cash flows - Initial outlay Payback period = ((Year…

Q: White mountain supply company purchases warehouse shelving for 18,400. Shipping charges were $ 370…

A: Depreciation The decrease in the real value of an asset due to continued use is called depreciation.…

Q: The stock KZ has an equity beta of 1.8. The market risk premium is 5% and the current risk-free rate…

A: Ke (required return) = Risk free rate + (Beta x Market risk premium)

Q: In some occupations and in some industries, the running of a business may involve sensitive…

A: Restrictive Covenants is a promise, or a condition included in a contract that prevent or restrict…

Q: Suppose the Japanese yen exchange rate is ¥116 = $1 and the British pound exchange rate is £1 =…

A: The cross-rate is used to refer to the exchange rate between two currencies based on their exchange…

Q: Compare the following 2 alternatives with a method of your choice. The market rate is 6% and inflat…

A: Present value of growing annuity With periodic interest rate (r), period (n), growth (g) and annuity…

Q: On January 1, 2003 Mike took out a 30-year mortgage loan in the amount of 200,000 at an annual…

A: Given: Particulars Amount Loan amount $200,000 Interest rate 6% Year 30     Repaid…

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.