1. [Bank Loan Considerations] Assume you started a new business last year with $50,000 of your own money, which was used to purchase equipment. Now you are seeking a $25,000 loan to finance the in- ventory needed to reach this year’s sales target. You have agreed to pledge your venture’s delivery truck and your personal automobile as support for the loan. Your sister has agreed to cosign the loan. During your initial year of operation, you paid your suppliers in a timely fashion.
Analyze the loan request from the viewpoint of a lender who uses the five Cs of credit analysis as an aid in deciding whether to make loans.
Assume that you are currently carrying an accounts receivable balance of $10,000. How might you use accounts receivables to obtain an additional bank loan?
Assume that at the end of next year you will have an accounts receivable balance of $15,000 and an inventories balance of $30,000. If a bank normally lends an amount equal to 80 percent of accounts receivable and 50 percent of inventories pledged as collateral, what would be the amount of a bank loan a year from now?
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1. [Bank Loan Considerations] Assume you started a new business last year with $50,000 of your...
Expert Corporation secured a one-year bank loan of P4,000,000 on October 1,2009.The loan is discounted at 10%.The Corporation signed a note for the loan and pledged P5,000,000 of its accounts receivable as collateral for the same. The accounting period of the corporation ends on December 31. (a) Prepare all entries,including adjust from the date from the date of loan up tp the date of maturity. (b) Balance Sheet presentation of the bank loan with an adequate disclosure on December 31,2009.
Assume that you have a 30 year fully-amortized fixed rate mortgage for your home. Your loan amount is $300,000 with a 3% annual interest rate. After 28 years, you would like to sell the property. What is your loan balance at the end of 28 years? Assume that you have a 30 year fully-amortized fixed rate mortgage for your home. Your loan amount is $300,000 with a 3% annual interest rate and your balloon payment is $50,000. What is your...
2) You have received a 3-year $10,000 loan from your bank. This is an amortized loan which means you have to make 3 equal annual payments to the bank. The bank is charging you 12% APR (annual percentage rate) for this loan. a. Complete the following amortization schedule. (25 points) Amortization schedule Beginning Balance Annual Payment Interest Balance Reduction year End Balance Expense $10,000 $0.00 How much in total you end up paying back to the bank? (5 points) Assume...
Suppose your firm is seeking a four year, amortizing $260,000 loan with annual payments and your bank is offering you the choice between a $268,000 loan with a $8,000 compensating balance and a $260,000 loan without a compensating balance. The interest rate on the $260,000 loan is 9.8 percent. How low would the interest rate on the loan with the compensating balance have to be for you to choose it? (Do not round intermediate calculations and round your final answer...
4- Assume that you can borrow $175,000 for one year from a local commercial bank a. The bank loan officer offers you the loan if you agree to pay $16,000 in interest plus repay the $175,000 at the year. What is the percent interest rate or effective cost? discount loan at 9 percent interest. What is the percent interest rate or effective cost? c. Which one of the two loans would you prefer? 5- Assume that the interest a. If...
Assume a 360 day year. You borrow $450 from your bank for 3 months. The loan agreement states that you must repay the loan at a rate of $150 per month plus interest. The interest rate for the loan is % above the prime interest rate. During the first month the prime rate is 45%, during the second month it is 5%, and during the third month it is 5%. What is the total amount of interest you pay on...
Bank of America offers you a $120,000, 5-year term loan at 6 percent annual interest. What will your annual loan payment be?
Bank of America offers you a $120,000, 6-year term loan at 8 percent annual interest. What will your annual loan payment be?
On the day you entered college, you borrowed $30,000 from your local bank. The termsof the loan include an interest rate of 4.75 percent. The terms stipulate that the principalis due in full one year after you graduate. Interest is to be paid annually at the end ofeach year. Assume that you complete college in four years. How much total interestwill you pay on this loan assuming you paid as agreed? $7,400 $1,425 $1,500 $7,267 O $7,125
Raymond Manufacturing faces a liquidity crisis —it needs a loan of $93,000 for 1 month. Having no source of additional unsecured borrowing, the firm must find a secured short-term lender. The firm's accounts receivable are quite low, but its inventory is considered liquid and reasonably good collateral. The book value of the inventory is$279,000, of which $111,600 is finished goods. (Note: Assume a365-day year.) (1) City-Wide Bank will make a $93,000 trust receipt loan against the finished goods inventory....