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Delicious77 [7]
3 years ago
6

Today is January 1, 2009. The state of Iowa has offered your firm a subsidized loan. It will be in the amount of $10,000,000 at

an interest rate of 5 percent and have ANNUAL (amortizing) payments over 3 years. The first payment is due today and your taxes are due January 1 of each year on the previous year's income. The yield to maturity on your firm's existing debt is 8 percent. What is the APV of this subsidized loan? If you rounded in your intermediate steps, the answer may be slightly different from what you got. Choose the closest.
Business
1 answer:
erastova [34]3 years ago
5 0

Complete question:

Today is January 1, 2009. The state of Iowa has offered your firm a subsidized loan. It will be in the amount of $10,000,000 at an interest rate of 5 percent and have ANNUAL (amortizing) payments over 3 years. The first payment is due today and your taxes are due January 1 of each year on the previous year's income. The yield to maturity on your firm's existing debt is 8 percent. What is the APV of this subsidized loan? If you rounded in your intermediate steps, the answer may be slightly different from what you got. Choose the closest.

A. -$3,497,224.43 B. $417,201.05 C.$840,797 D. None of the above

Answer:

$840,797  is the APV of this subsidized loan

Solution:

Input the loan in a financial equation first and resolve the payment:

PV=10,000,000

N= 3I = 5%

PMT = 3,672,085

Now, find the APV of the loan:

CF0 = $10,000,000

CF1= -$3,502,085

     = -$3,172,085 - .66 * $500,000CF2

     = -$3,556,011CF3

     = -$3,612,632I

     = 8%

APV = $840,797

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Sidana [21]

Answer:

The statement is: True.

Explanation:

If we have been given an assignment, it is important to set a schedule of activities to ensure that the final form of our work is delivered on or before the <em>due date</em>, if possible. In the way, there could be problems of various types -for example, technology when delivering a report- that could interrupt our work. Therefore, it is important to consider those risks while scheduling so that we have a contingency plan that will not impact our research and the date we will deliver it.

8 0
3 years ago
The following transactions occur for Cardinal Music Academy during the month of October: Provide music lessons to students for $
Masteriza [31]

Answer:

a. Journal entry to record music lesson

Date         Account title and Explanation     Debit     Credit

October   Cash                                              $12,500

                       Service revenue                                    $12,500

                (To record music lesson for cash)

b. Journal entry to record prepaid insurance purchase

Date         Account title and Explanation     Debit     Credit

October   Prepaid insurance                         $3,660

                       Cash                                                        $3,660

                 (To record  prepaid insurance paid for next year)

c. Journal entry to record musical equipment purchased

Date         Account title and Explanation     Debit     Credit

October    Equipment                                    $15,500

                        Cash                                                      $15,500

                  (To record musical equipment purchase for cash)

d. Journal entry to record

Date         Account title and Explanation     Debit     Credit

October    Cash                                              $21,000

                        Notes payable                                       $21,000

                  (To record loan taken by signing a note)

6 0
3 years ago
If the Dow Jones Industrial Average is 3.2% down that means that: Question 10 options: The stocks of all the companies in Dow Jo
Vera_Pavlovna [14]

Answer:

b). The average value of the 30 blue-chip stocks is down by 3.2%.  

Explanation:

'Dow Jones Industrial Average' also known as 'DJIA' is characterized as the standard indicator to denote the stock-market prices of the shares of the major companies associated with blue-chip in the United States.

As per the question, a down or fall in DJIA by 3.2% would indicate that the stock prices of the companies trading with 'blue-chip' have faced a reduction in their share prices by 3.2% for that day. So, this allows the investors to keep a check on the stock prices and invest accordingly whenever they find it profitable. Thus, <u>option b</u> is the correct answer as the other options fail to convey this idea rather they either talk about the loss of value instead of decrease(in options a and c) or disassociates the entire concept with the stock market(in option d).

5 0
2 years ago
A body in the solar system has a period of 10,759.22 days and a perihelion speed of 10.18 km/s. a. Calculate the aphelion radius
anastassius [24]

Answer:

Explanation:

From the information given, by applying Kepler's 3rd law,

T^2 \alpha  a^3

where;

T = period

a = semi major axis

T = 356 days (for earth)

a = 1 AU = 1.496 \times 10^8 \ km

Therefore, T^2 = ca^3

c= \dfrac{365^2}{(1.496 \times 10^8)^3}

c = 3.9791 \times 10^{20} \ day^2/km^3

However, if the body in the solar system has a period of 10.759.22 days, then, a =?

∴

T^2 = ca^3

a3 = \dfrac{10759.22^2}{3.9791 \times 10^{-20}}

a^3 = 2.9092 \times 10^{27}

a= \sqrt[3]{2.9092 \times 10^{27}}

a = 1.4275 \times 10^9 \ km

However, the velocity for a perihelion = 10.18 km/s

Using the formula

v = \sqrt{GM ( \dfrac{2}{r}-\dfrac{1}{a})} to calculate the radius, we have:

G = 6.674 \times 10^{-11}

M = 1.989\times 10^{30} \ kg

r = perihelion

v ^2= GM ( \dfrac{2}{r}-\dfrac{1}{a})

(10.18 \times 10^3) ^2= 6.674 \times 10^{-11} \times 1.989 \times 10^{30}  ( \dfrac{2}{r}-\dfrac{1}{1.425 \times 10^{12}})

7.8068 \times 10^{-13}= \dfrac{2}{r}-\dfrac{1}{1.425 \times 10^{12}}

\dfrac{2}{r} = 1.4824 \times 10^{-12}

r = \dfrac{2}{1.4824 \times 10^{-12}}

r = 1.349 \times 10^{12}

Similarly, the perihelion is expressed by the equation,

r = a(1 - e)

where ;

e= eccentricity

∴

1.349 \times 10^{12} = 1.425 \times 10^{12} ( 1 - e)

1.349 \times 10^{12}  -  1.425 \times 10^{12}= -  1.425 \times 10^{12} (e)

-7.6\times 10^{10}= -  1.425 \times 10^{12} (e)

\dfrac{-7.6\times 10^{10}}{-  1.425 \times 10^{12}}=  (e)

e ( eccentricity) = 0.0533

Aphelion radius in natural miles, r = a( 1+ e)

r = 1.425 \times 10^{12} ( 1 + 0.0533)

r = 1.50 \times 10^{12} \ m

to nautical miles, we have:

r = 1.50 \times 10^{12} \times 0.00054  \ nautical \ mile

radius of aphelion \mathbf{r = 8.10 \times 10^8} nautical miles

In respect to the value of a( i.e 1.4275 \times  10^9 \ km)

the body of the solar system is Saturn

5 0
3 years ago
On July 1, Dichter Company obtained a $2,000,000, 180-day bank loan at an annual rate of 12%. The loan agreement requires Dichte
belka [17]

Answer: 12.67%

Explanation:

The effective interest rate on a borrowing is the net annual interest cost divided by the net available proceeds from the borrowing. Dichter gross annual interest cost is $240,000 ($2,000,000 x 12%). Dichter is required to maintain a compensating balance of $400,000, which is $200,000 more than their normal balance of $200,000. Therefore, Dichter earns incremental annual interest revenue of $12,000 ($200,000 x 6%) on the excess compensating balance. The net annual interest cost is $228,000 ($240,000 - $12,000). The net available proceeds from the borrowing is $1,800,000 ($2,000,000 loan less $200,000 excess compensating balance). Therefore, the effective annual interest rate is 12.67%

6 0
3 years ago
Read 2 more answers
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