Answer: Sky's effective interest rate on this loan is 8.39%.
In this question, we assume that interest is compounded annually.
Since Sky issues a non-interest bearing note, Star Finance will deduct 7 months' interest at 8% on the Face Value of the loan and pay the rest as principal to Sky.
Face value of the note $16 million
Discount Rate p.a 8%
Tenure of the note 7 months
[tex]Loan Amount received by Sky = Face Value - Discount on note[/tex]
So, Sky pays an interest of 0.746666667 on a sum of 15.25333333 for 7 months. This works out to a seven month interest of:
From this we can work out the effective interest rate for Sky as follows:
This is true. :)
Hope this helps.
*ps, I take business, just pm me. :)*
Answer: True. Market risk refers to the tendency of a stock to move with the general stock market. A stock with above average market risk will tend to be more volatile than an average stock, and its beta will be greater.
Explanation: If a stock has a beta that is greater than 1, there is a higher risk for the stock. High risk stocks have a higher potential for return, but are also easier to lose funds from.
Answer:
The price of the bond is $104.15
Explanation:
The price of the company's new two year debt is the present value of its future cash flows.
Since the debt pays coupon semi-annually the number of coupons payable over two years is 4 and pays par value with the fourth coupon.
Yield to maturity is 3.9%+0.8%=4.7%/2=2.35% (semi-annually)
coupon rate is 6.9%/2=3.45%
PMT=3.45%*100
PMT=$3.45
par value $100
nper=2*2=4
Using present value formula in excel
pv=(rate,nper,pmt,fv)
pv=(2.35%,4,3.45,100)
pv=$104.15
Answer:
The correct answer for gain on transfer is $40,000 and the basis of his stock is $0.
Explanation:
According to the scenario, the given data are as follows:
Liability on the transferred real estate = $300,000
Amount transferred on adjusted basis = $260,000
So, we can calculate the gain on the transfer by using following formula:
Gain on transfer = Liability on the transferred real estate - Amount transferred on adjusted basis
= $300,000 - $260,000
= $40,000
Hence, the gain on the transfer is $40,000 and $0 on the basis of stock because 100% stock exchanged.
