short term finance and planning.
Mutiara Bhd recently arranged for a line of credit with the Permata Bank. The terms of the agreement called for a RM150,000 maximum loan with interest set at 12% per annum for 6-month. In addition, Mutiara’s must maintain a 5% compensating balance in its demand deposit throughout the year.
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Short term financing
Mutiara Bhd recently arranged for a line of credit with the Permata Bank. The term of the agreement called for a RM150000 maximum loan with interest set at 12% per annum for 6-month. In addition, Mutiara must maintain a 5% compensating balance in its demand deposit throughout the year. If mutiara normally maintains RM25000 balance in its checking account with Permata Bank, what is the effective of credit through the...
(Cost of short-term bank loan) On July 1, 2015, the Southwest Forging Corporation arranged for a line of credit with the First National Bank (FNB) of Dallas. The terms of the agreement call for a $100...
(Cost of short-term bank loan) On July 1, 2015, the Southwest Forging Corporation arranged for a line of credit with the First National Bank (FNB) of Dallas. The terms of the agreement call for a $100,000 maximum loan with interest set at 1 percent over prime. In addition, the firm has to maintain a 20 percent compensating balance in its demand deposit account throughout the year. The prime rate is currently 4.5 percent. If Southwest normally maintains a $20,000 to...
nitiduri APK 18-8A/(Cost of short-term bank loan) The Southwest Forging Corporation recently arranged for a line...
nitiduri APK 18-8A/(Cost of short-term bank loan) The Southwest Forging Corporation recently arranged for a line of credit with the First National Bank of Dallas. The terms of the agreement called for a $100,000 maximum loan with interest set at 1 percent over prime. In addition, the firm has to maintain a 20 percent compensating balance in its demand deposit account throughout the year. The prime rate is currently 12 percent. V a. If Southwest normally maintains a $20,000 to...
Paymaster Enterprises has arranged to finance its seasonal? working-capital needs with a? short-term bank loan. The...
Paymaster Enterprises has arranged to finance its seasonal? working-capital needs with a? short-term bank loan. The loan will carry a rate of 14 percent per annum with interest paid in advance? (discounted). In? addition, Paymaster must maintain a minimum demand deposit with the bank of 11 percent of the loan balance throughout the term of the loan. If Paymaster plans to borrow $90,000 for a period of 4 ?months, what is the annualized cost of the bank? loan? (Round to...
Exercises #11 1. Xtra Corporation needs $50,000 for three months to finance its working capital. The company has arranged a short-term loan with a bank. The bank charges 8% annual interest rate wi...
Exercises #11 1. Xtra Corporation needs $50,000 for three months to finance its working capital. The company has arranged a short-term loan with a bank. The bank charges 8% annual interest rate with interest paid in advance. The bank also requires 5% of the borrowed amount as a compensating balance. Assume Xtra does not have money to serve as a compensating balance and pay interest upfront 1.1 How much Xtra have to borrow? 1.2 Find effective cost of bank loan...
(Related to Checkpoint 18.2) (Calculating the cost of short-term financing) The R. Morin Construction Company needs...
(Related to Checkpoint 18.2) (Calculating the cost of short-term financing) The R. Morin Construction Company needs to borrow $90,000 to help finance the cost of a new $135,000 hydraulic crane used in the firm's commercial construction business. The crane will pay for itself in one year, and the firm is considering the following alternatives for financing its purchase: Alternative A. The firm's bank has agreed to lend the $90,000 at a rate of 12 percent. Interest would be discounted, and...
Cost of short-term financing) The R. Morin Construction Company needs to borrow $90 comma 000 to...
Cost of short-term financing) The R. Morin Construction Company needs to borrow $90 comma 000 to help finance the cost of a new $126 comma 000 hydraulic crane used in the firm's commercial construction business. The crane will pay for itself in 1 year, and the firm is considering the following alternatives for financing its purchase: Alternative Along dashThe firm's bank has agreed to lend the $90 comma 000 at a rate of 12 percent. Interest would be discounted, and...
PLEASE SHOW WORK P16-12 Compensating balances and effective annual rates Lincoln Industries has a line of...
PLEASE SHOW WORK
P16-12 Compensating balances and effective annual rates Lincoln Industries has a line of credit at Bank Two that requires it to pay 11% interest on its borrowing and to maintain a compensating balance equal to 15% of the amount borrowed. The firm has borrowed $800,000 during the year under the agreement. Calculate the effective annual rate on the firm's borrowing in each of the following circumstances: a. The firm normally maintains no deposit balances at Bank Two....
(Related to Checkpoint 18.2) (Calculating the cost of short-term financing) The R. Morin Construction Company needs...
(Related to Checkpoint 18.2) (Calculating the cost of short-term financing) The R. Morin Construction Company needs to borrow $120,000 to help finance the cost of a new $180,000 hydraulic crane used in the firm's commercial construction business. The crane will pay for itself in one year, and the firm is considering the following alternatives for financing its purchase: Alternative A. The firm's bank has agreed to lend the $120,000 at a rate ofb13percent. Interest would be discounted, and a 15...
Your company has arranged a revolving credit agreement for up to $78 million at an interest...
Your company has arranged a revolving credit agreement for up to $78 million at an interest rate of 1.47 percent per quarter. The agreement also requires your company to maintain a compensating balance of 4 percent of the unused portion of the credit line, to be deposited in a non-interest bearing account. Your company's short-term investment account at the same bank pays an interest rate of 0.61 per quarter. What is the effective annual interest rate if your company borrows...
nitiduri APK 18-8A/(Cost of short-term bank loan) The Southwest Forging Corporation recently arranged for a line of credit with the First National Bank of Dallas. The terms of the agreement called for a $100,000 maximum loan with interest set at 1 percent over prime. In addition, the firm has to maintain a 20 percent compensating balance in its demand deposit account throughout the year. The prime rate is currently 12 percent. V a. If Southwest normally maintains a $20,000 to...
Exercises #11 1. Xtra Corporation needs $50,000 for three months to finance its working capital. The company has arranged a short-term loan with a bank. The bank charges 8% annual interest rate with interest paid in advance. The bank also requires 5% of the borrowed amount as a compensating balance. Assume Xtra does not have money to serve as a compensating balance and pay interest upfront 1.1 How much Xtra have to borrow? 1.2 Find effective cost of bank loan...
PLEASE SHOW WORK
P16-12 Compensating balances and effective annual rates Lincoln Industries has a line of credit at Bank Two that requires it to pay 11% interest on its borrowing and to maintain a compensating balance equal to 15% of the amount borrowed. The firm has borrowed $800,000 during the year under the agreement. Calculate the effective annual rate on the firm's borrowing in each of the following circumstances: a. The firm normally maintains no deposit balances at Bank Two....
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