Answer:
C)They remain the same until the credit is paid off.
Explanation:
In a closed-end credit, borrower and lender agree on principal amount, interest rate and monthly payments. These features stay the same over time.
The most common types of closed-end credit are mortgages and car loans.
For example, if a person wants to buy a car on credit, they agree to pay a monthly amount, that includes both interest and principal payments, until the full amount is paid off in a specified date in the future. After the last payment, the right to ownership of the car is transferred from the borrower to the lender, closing the credit.
Answer: No
Explanation:
When computing a project analysis for a project, only relevant cash flow should be included in the Project's cash flow analysis. Relevant cash-flow are those that will only occur if the project was embarked on.
If the cash flow in question is still going to occur even if the project wasn't initiated as is the case with Project A, it is not a relevant cash-flow and should not be included in the cash-flow analysis.
Answer:
7.74%
Explanation:
The yield to call would be the internal rate of return considering the cahsflow until the bodn is called. W can solve for that using excel IRR function;
We list the cashflow in order.
F0 -1180
F1 105
F2 105
F3 105
F4 105
F5 1205 (105 coupon payment plus 1100 principal)
We now write the function and get the YTC
=IRR(B1:B6) 7.7366%
Answer:
balance sheet
Explanation:
The <u>balance sheet</u> shows how the capital is structured in the business, including the value of assets and the amount the firm owes at a specific point in time.
Answer:
Paraguas should borrow at LIBOR + 2.000% and swap for fixed rate debt.
Lluvia should choose funding in floating rate
Explanation:
Paraguas wants the security of fixed rate borrowing; thus it should borrow at LIBOR + 2.000% and swap for fixed rate debt, in which Libor is 5.500%; their total cost at 7.5% is still lower than Fixed rate 12.0%
Lluvia prefer the flexibility of floating rate borrowing, and its rating is better; then it can enjoy lower cost of borrowing at 5%. However it may face the increase if LIBOR increase later; vice versa if LIBOR decrease, its cost of borrowing is able to reduce also.