Question: Zerox Copying Company plans to borrow 172 000 New Jersey National
Zerox Copying Company plans to borrow $172,000. New Jersey National Bank will lend the money at one-half percentage point over the prime rate at the time of 17Â½ percent (18 percent total) and requires a compensating balance of 21 percent. The principal in this case will be funds that the firm can effectively use in the business. This loan is for one year. What is the effective rate of interest? What would the effective rate be if Zerox were required to make four quarterly payments to retire the loan?
Answer to relevant QuestionsLewis and Clark Camping Supplies Inc. is borrowing $51,000 from Western State Bank. The total interest is $15,700. The loan will be paid by making equal monthly payments for the next three years. What is the effective rate ...Harper Engine Company needs $631,000 to take a cash discount of 2.5/20, net 75. A banker will loan the money for 55 days at an interest cost of $13,300.a. What is the effective rate on the bank loan?b. How much would it cost ...What approaches can be taken in valuing a firmâ€™s stock when there is no cash dividend payment?Go to Table 10-1, which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) decline from 11 percent to 8 percent:a. What is the bond price at 11 percent?b. What ...Lance Whittingham IV specializes in buying deep discount bonds. These represent bonds that are trading at well below par value. He has his eye on a bond issued by the Leisure Time Corporation. The $1,000 par value bond pays ...
Post your question