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mash [69]
3 years ago
14

For the following problem(s), consider these debt strategies being considered by a corporate borrower. Each is intended to provi

de $1,000,000 in financing for a three-year period.∙ Strategy #1: Borrow $1,000,000 for three years at a fixed rate of interest of 7%.∙ Strategy #2: Borrow $1,000,000 for three years at a floating rate of LIBOR + 2%, to be reset annually. The current LIBOR rate is 3.50%∙ Strategy #3: Borrow $1,000,000 for one year at a fixed rate, and then renew the credit annually. The current one-year rate is 5%.Refer to Instruction 8.1. Which strategy (strategies) will eliminate credit risk?
Business
1 answer:
natita [175]3 years ago
5 0

Answer:

From the strategies provided, the correct debt strategies that will help a corporate borrower eliminate credit risk are strategy 1 and strategy 2, which are; Strategy #1: Borrow $1,000,000 for three years at a fixed rate of interest of 7%. and Strategy #2: Borrow $1,000,000 for three years at a floating rate of LIBOR + 2%, to be reset annually. The current LIBOR rate is 3.50%.

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The three ways of organizing data for use by an organization are:
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<span>The three ways of organizing data for use by an organization are: centralized, structured, and partitioned.
A centralized type of data organization refers to the fact that everything is located and stored in one location. Structured refers to the fact that there are a several structures within one location, and partitioned to a couple of partitions where the data is stored.
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7 0
3 years ago
If Melisha can pay for her vehicle with a 4-year loan or with a lease with the same down payment and same interest rate, why wil
gladu [14]

The answer is;


Since the loan payment incorporates amortization. (Regardless of whether the financing cost is the equivalent on both the advance and the rent, the advance incorporates an additional sum for amortization that would enable Melisha to satisfy the auto after some time and claim it toward the finish of the advance time frame).


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8 0
3 years ago
There is an inverse relationship between bonds' quality ratings and their required rates of return. Thus, the required return is
beks73 [17]

Answer:

The statement is true.

Explanation:

The investor aversion to risk must be compensated with an increased return to make it more feasible.

If all bonds' return were the same then, investor will not invest on high risk bonds.

Company's will not issue the bond to yield higher than they can pay nor higher if they can do it the same as AAA. They do it as the only way to attract investment to his business.

6 0
2 years ago
The board of commissioners of the City of Hartmoore adopted a General Fund budget for the year ending June 30, 2017, that includ
ASHA 777 [7]

Answer:

See explanation section

Explanation:

Req. A

As the general fund budget is formally integrated, the journal entry at the beginning requires to make the revenue debit and appropriations to be credit. And there must be a balancing figure to integrate the operational transfers.

Debit      Revenues                            $1,432,500

Debit      Bond proceeds                        427,500

Credit               Appropriations                                       $980,000

Credit               Operating transfers out                           480,000

Credit               Fund balance (Balance debit - credit)    400,000

Fund balance is the budgetary amount.

Req. B

At the end of the accounting period, the fund balance needs to be removed by making it debit. Most importantly, as the year wears out, all the budgetary plans will be transferred. Therefore, the journal entry is-

Debit      Appropriations                  $980,000

Debit      Operating transfers out      480,000                  

Credit     Fund balance (Req. A)      $400,000

Credit               Revenues                                     $1,432,500

Credit               Bond proceeds                                 427,500

6 0
3 years ago
Nabors Company reported the following current assets and liabilities for December 31 for two recent years: Dec. 31, Current Year
BigorU [14]

Answer:

a. Quick ratio for current year =2.16

   Quick ratio for current year =2.05

b. Improving

Explanation:

A.

To find quick ratios we need to divide current assets by current liabilities

Quick Ratio = \frac{currentasssets}{currentliabilities}

Current assets                         Dec 31 current year      Dec 31 previous year

Cash                                                  $1,430                                $1,710

Temporary investment                    $3,120                               $3,840

Accounts receivable                        $7,150                               $2,610

Inventory                                         $2,340                                $2,300

Total current assets                      $14,040                              $10,460

Current liability                              

Account payable                            $6,500                                $5,100

Quick Ratio                                     \frac{14040}{6500 }                                 \frac{10460}{5100}

Quick Ratio                                      2.16                                  2.05

                         

B.

As you can see above that in the previous year Nabors company had a quick ratio of 2.05 but it has slightly increased by 0.11 in the current year.  

3 0
3 years ago
Read 2 more answers
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