1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
ivanzaharov [21]
4 years ago
8

Dell Computers would like to borrow pounds, and Virgin Airlines wants to borrow dollars. Because Dell is better known in the Uni

ted States, it can borrow on its own dollars at 7 percent and pounds at 9 percent, whereas Virgin can on its own borrow dollars at 8 percent and pounds at 8.5% Suppose Dell wants to borrow £10 million for two years, Virgin wants to borrow $16 million for two years, and the current ($/£) exchange rate is $1.60. What swap transaction would accomplish this objective? Assume the counterparties would exchange principal and interest payments with no rate adjustments.
Business
2 answers:
JulijaS [17]4 years ago
7 0

Answer and Explanation:

The transaction that would accomplish this objective Assume the counterparties would exchange principal and interest payments with no rate adjustments is that Virgin would borrow £10 million for two conservatively years WHILE Dell would borrow $16 million for two years as well. The two companies would then go ahead to swap their proceeds and payment streams.

An Assume their are no interest rate adjustments, Dell would pay 8.5% on the £10 million while Virgin would pay 7% on its $16 million due to the fact that its alternative was to borrow pounds at 9%, in which Dell would inturn save 0.5% on its borrowings, or an annual savings of £50,000 and similarly Virgin winds up paying an interest rate of 7% instead of 8% which was on its dollar borrowings, saving it 1% every year.

Alex73 [517]4 years ago
6 0

Answer:

Explanation:

                        USD GBP        Prefers

Dell                     7           9         GBP

Virgin Airlines    8          8.5        USD

In a swap exchange Party A will have a relative preferred position in one money and Party B will have a bit of leeway in the other cash. For this situation Dell has a similar bit of leeway in USD getting rate and Virgin has a preferred position in GBP acquiring rate.  

Additionally note that dependent on the FICO assessments of the organization the acquiring rate will vary pulling in parties for a swap exchange.

Virgin would borrow £10 million for two years and Dell would borrow $16 million for two years. The two companies would then swap their proceeds and payment streams. Then they enter into a swap agreement to exchange their cash flows to get their preferred currency rates with an interest rate mutually benefiting both the parties.

You might be interested in
Raymond scores high on practical intelligence and has extensive knowledge and experience in leading a pharmaceutical research te
tino4ka555 [31]

Answer:

<u>domain specific.</u>

Explanation:

In this matter, we can analyze that Raymond has practical intelligence, which can be defined as the constitution of actions or repeated uses that will result in knowledge, that is, he has specific domain over certain subjects, such as his broad knowledge and experience in leadership of a pharmaceutical research team.

Therefore, when asked to organize a fundraising activity for a charity, he feels unprepared and uncomfortable, due to the lack of specific domain, that is, experience and repetition of performing such task.

8 0
3 years ago
Read 2 more answers
fficiency wages, minimum-wage laws, and unions all keep wages a. below the equilibrium level, causing a shortage of labor. b. be
Inessa [10]

Answer:

d. above the equilibrium level, causing a surplus of labor.

Explanation:

Market wage equilibrium refers to the ideal wage rate where the labor supply and demand curves intersect. At equilibrium wage, the benefits derived from an extra worker equals the cost associated with the additional worker.

The efficiency wage theory advocates for higher wages to motivate employees to increase production. Minimum wage laws and trades unions negotiate for higher wages above the equilibrium rate. Trade unions will fight to keep the maximum number of employees or their members in employment.

8 0
3 years ago
Money is: the gold and silver behind the currency and the coins that are issued by the government. only the printed paper curren
ehidna [41]

Answer:

anything that both buyers and sellers will accept in exchange for goods and services

Explanation:

Money is anything that is accepted as payment for goods or services or as repayment of debt. According to economists, money refers to something beyond just paper bills and coins. It is a medium of exchange , unit of account  and store of value. Money can be used to transport purchasing power from one time period to another.

4 0
3 years ago
A real estate loan where a homeowner receives monthly payments based on accumulated equity rather than a lump sum and is repaid
ivanzaharov [21]

Answer:

reverse annuity mortgage

Explanation:

The term that is being described is known as a reverse annuity mortgage. Like defined in the question, this is a loan that allows you to cash in some of your home's equity without actually needing to sell the entire real estate property and move out of your home. Instead the loan is secured against the value of your home and monthly payments are paid to the owner that asked for the loan.

6 0
4 years ago
A firm is reviewing an investment opportunity that requires an initial cash outlay of $336,875 and promises to return the follow
Fofino [41]

Answer:

The NPV of this investment is $64,581.75

Explanation:

Hi, we need to discount to present value all the future cash flows, the formula to use is as follows:

NPV=-Investment+\frac{CF1}{(1+r)^{1} }+\frac{CF2}{(1+r)^{2}} +\frac{CF3}{(1+r)^{3}} +\frac{CF4}{(1+r)^{4}} +\frac{CF5}{(1+r)^{5}}

Where

NPV = Net Present Value

CF = The cash flow stated in the problem by year

r= discount rate (in our case, 0.08 or 8%)

Now, let´s solve this.

NPV=-336,875+\frac{100,000}{(1+0.08)^{1} }+\frac{82,000}{(1+0.08)^{2}} +\frac{76,000}{(1+0.08)^{3}} +\frac{111,000}{(1+0.08)^{4}} +\frac{142,000}{(1+0.08)^{5}}

NPV=-336,875+ 92,592.59 + 70,301.78 + 60,331.25 + 81,588.31+96,642.81

NPV=64,581.75

So, the net present value of this project is $64,581.75

Best of luck.

7 0
3 years ago
Other questions:
  • What is the New York Stock Exchange? A. The world's largest exchange for trading stocks and other securities B. An indicator of
    13·2 answers
  • Why would legislation most likely ask interest groups to help shape public policy?
    14·1 answer
  • ​____________ are intended to change the level of reserves and the monetary base.
    11·2 answers
  • Opportunity costs refer to:
    10·2 answers
  • Stagflation occurs when high inflation combines with...
    9·1 answer
  • To achieve the human resource management goal of promoting individual growth and development, organizations should:
    5·1 answer
  • The prizes that can be won in a sweepstakes are listed below together with the chances of winning each one:$5200 (1 chance in 89
    10·1 answer
  • Which of the following scenarios is an example of monopolistic competition?
    12·2 answers
  • Jenna Jeffries started her business baking dog treats by investing cash of $1,000. During May, its first month of operations, Je
    13·1 answer
  • A $150,000 loan has monthly interest-only payments of $1,000. its annual interest rate is:________
    6·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!