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
Xelga [282]
3 years ago
5

Luke enters into a three-year interest rate swap to receive a fixed rate and pay a variable rate based on future 1-year LIBOR ra

tes. The settlement occurs at the end of every year. The notional amount is 1,000 for year 1, 800 for year 2, and 600 for year 3. tt stst 1 4% 2 5% 3 6% 4 7% 5 8% Determine the net swap payment made at the end of the first year.
Business
1 answer:
Sladkaya [172]3 years ago
5 0

Answer:

The net swap payment made is $49.

Explanation:

In order to find the solution the values are used which are as follows:

The Value of interest in each year is calcuated as follows

Interest=Interest\ Rate\%\times Amount

The values of interest rate and amount for 3 years are as follows:

  • Interest rate for year 1 is 4% for an amount of 1000
  • Interest rate for year 2 is 5% for the amount of 1800
  • Interest rate for the year 3 is 6% for the amount of 800.

These values are calculated as follows:

Interest_1=4\%\times 1000\\Interest_1=40

Similarly

Interest_2=5\%\times 1800\\Interest_2=90

Also

Interest_3=6\%\times 800\\Interest_3=48

So the total interest is

Interest_T=Interest_1+Interest_2+Interest_3\\Interest_T=40+90+48\\Interest_T=178

The total amount is given as

Amount_T=Amount_1+Amount_2+Amount_3\\Amount_T=1000+1800+800\\Amount_T=3600

Fixed rate is given as

\dfrac{Interest_T}{Amount_T}\\=\dfrac{178}{3600}\\\\=0.049\ or\ 4.9\%

Now for the swap payment made at the end of first year is

Amount_{1st swap}=Fixed Rate\times Amount_1\\Amount_{1st swap}=4.9\%\times 1000\\Amount_{1st swap}=$49

You might be interested in
Negotiated transfer prices
horrorfan [7]
The devision agrees a transfer price between themselves. This price may not reflect opportunity cost by producing and selling products. Reflects bargaining prowess of individual mangers.
6 0
2 years ago
Develop a realistic example in which you expect positive covariance​
AURORKA [14]

Answer:

Composure and time management

Explanation:

these are realistic goals that people can reach and will have a positive outcome (do you mind following)

3 0
3 years ago
At the end of the systems implementation phase, the final report to management should include ____.
Nataly_w [17]
As far as I remember, at the end of the systems implementation phase, the final report to management should include these elements:

1. <span>a comparison of actual costs and schedules to the original estimates;

2. </span>final versions of all system documentation;

3. <span>planned modifications and enhancements to the system that have been identified;

It's necessary thing in system analysis.</span>
3 0
3 years ago
You want to buy a new sports coupe for $75,200, and the finance office at the dealership has quoted you a loan with an APR of 7.
charle [14.2K]

Answer:

1. $1,821.76

2. 7.87%

Explanation:

We use the PMT formula that is shown in the attachment below:

Provided that

Present value = $75,200

Future value = $0

Rate of interest = 7.6% ÷ 2 = 0.6333333%

NPER = 48 months

The formula is shown below:

= PMT(Rate;NPER;-PV;FV;type)

The present value come in negative

So, after solving this, the monthly payment is $1,821.76

2. Now the effective annual rate is

= (1 + APR ÷ number of months)^number of months - 1

= (1 + 7.6% ÷ 12)^12 - 1

= 7.87%

4 0
3 years ago
Island Corporation applies overhead based upon machine-hours. Budgeted factory overhead was $375,000 and budgeted machine-hours
vivado [14]

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

Island Corporation applies overhead based upon machine-hours. Budgeted factory overhead was $375,000 and budgeted machine-hours were 12,500. Actual factory overhead was $387,920 and actual machine-hours were 13,150.

A) Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 375,000/12,500= $30 per machine hour

B) Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 30*13,150= $394,500

C) Over/under allocation= real MOH - allocated MOH

Over/under allocation= 387,920 - 394,500= 6,580 overallocated

6 0
3 years ago
Other questions:
  • You are preparing a presentation on networking for a professional development seminar that your company is hosting for its emplo
    15·1 answer
  • Domestic telecommunication companies in the United States are struggling due to foreign competition. How can the US government h
    14·1 answer
  • ____ includes the planning, executing, and controlling of all activities involved in raw material sourcing and procurement, conv
    15·1 answer
  • Market segments are Multiple Choice all buyers of a product or service who have previously purchased a particular firm's product
    6·1 answer
  • A good with many close substitutes is likely to have relatively ______ demand, since consumers can easily choose to purchase one
    13·1 answer
  • Downward Dog Wines had to market its products with a different name in a foreign market as it was mandatory to translate the nam
    11·1 answer
  • Foster, Inc., purchased a truck by paying $5,000 and borrowing the remaining $30,000 required to complete the transaction. Ident
    13·1 answer
  • ABC Company issues a 3-year bond with a $1,000 Face Value and a 5% Coupon Rate, with coupons paid once a year at the end of ever
    7·1 answer
  • Jay, a divisional vice president of a consumer goods manufacturer, gives a presentation to all divisional employees to outline t
    10·1 answer
  • For a plaintiff to establish that he or she has standing to sue, the plaintiff must allege ________.
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!