$450‚000 Short-term interest expense = 5% [$450‚000 + ½ ($350‚000)] = 5% ($625‚000) = $31‚250 Long-term interest expense = 10% [$600‚000 + ½ ($350‚000)] = 10% ($775‚000) = $77‚500 Total interest expense = $31‚250 + $77‚500 = $108‚750 Earnings before interest and taxes $200‚000 Interest expense 108‚750 Earnings before taxes $ 91‚250 Taxes (30%) 27‚375 Earnings after taxes $ 63‚875 b. Alternative financing plan Short-term interest expense = 5% [½ ($450
Premium Finance Debt Bond
determine the amount of interest and the amount that was applied to reduce the principal. To determine the amount of interest and the amount that will be applied to reduce the principle we must use the formula‚ I = Prt. I = interest‚ P = is the principle or the balance‚ r = is the annual percentage rate‚ and t is the time frame. So‚ we will let P = $5‚ 270‚ r = 15.53%‚ t = 1/12 (1 represents one month out of 12 months). I = (5‚270)(.1553)(1/12) = $68.20 ‚ this is what the interest would be. This means
Premium Credit card Interest Debt
Has Diageo’s capital structure been as conservative as it believes? (What interest rate coverage ratio has it been targeting? How does it look relative to its competitors?) Diageo’s capital structure has not been as conservative as it believes. Although their capital structure in FY 2000 has been as conservative as it has targeted‚ it is less conservative compared to other companies in related industries. The interest rate coverage ratio that it has been targeting is between 5 and 8 x and they
Premium Credit rating Interest Finance
com/calculators/managing-debt/minimum-payment-calculator.aspx Credit Card Balance Interest Rate Minimum/Fixed Payment Number of Months to Pay in Full Total Interest Paid $5‚000 13% Minimum $5‚000 18% Minimum $2‚000 15% Fixed $50 $2‚000 15% Fixed $100 Minimum in this example should be Interest plus 1% of balance‚ and it will then default to a $15 minimum. 2. In the minimum payment example‚ a 5% interest rate difference results in how much extra interest paid? $70.83 3. In the fixed rate example‚ how much would
Premium Debt Credit card Money
3‚000 E10-7 (a) Avoidable Interest Weighted-Average Accumulated Expenditures X Interest Rate = Avoidable Interest $2‚000‚000 12% $240‚000 1‚800‚000 10.38% 186‚840 $3‚800‚000 $426‚840 Weighted-average interest rate computation Principal Interest 10% short-term loan $1‚600‚000 $160‚000 11% long-term loan 1‚000‚000 110‚000 $2‚600‚000 $270‚000 Total Interest = $270‚000 = 10.38% Total Principal
Premium Generally Accepted Accounting Principles Revenue Depreciation
up paying a bill that takes those years to pay off or heavy interest rates that come with it each time you miss a payment or you are late paying it. With a credit card balance of 5‚270.00 and an (APR) of 15.53% with no fees applied. If I was to take 5‚270 x 15.53% that will give me 818.43 interest for the whole year. The maximum monthly payment would be 5‚270.00 + 818.43 =6‚088.43. To get this balance I took the balance + total interest = total balance. Next to get the minimum monthly payment you
Premium Credit card Interest Money
of investment expenditure. Another important consideration is that the money spent on capital investment can actually be used in alternative ways‚ most often‚ by lending the resources out to earn interests. So by engaging in a certain capital investment‚ firms will have to forgo these interests or alternative investment possibilities. Thus‚ it is vital for them to adjust the anticipated stream of future expected profits to expected present values so as to weigh the costs and benefits of an investment
Premium Investment Net present value Rate of return
FINA104 GROUP BUSINESS CASE PRESENTATION 1ST Semester‚ Academic Year 2013-2014 Adapted from FUNDAMENTALS OF FINANCIAL MANAGEMENT‚ Twelfth Edition‚ by Eugene F. Brigham and Joel F. Houston‚ South-Western Cengage Learning Risk and Return Case. Assume that you recently graduated with a major in finance. You just landed a job as a financial planner with Merrill Finch Inc.‚ a large financial services corporation. Your first assignment is to invest $100‚000 for a client. Because the funds are to
Premium Investment Rate of return Risk aversion
selling‚ and servicing home mortgage loans for subprime borrowers who couldn’t get finance from other sources. By 2006 New Century expanded its product range to include fixed-rate mortgages‚ adjustable rate mortgages (ARMs)‚ hybrid mortgages‚ and interest-only (IO) mortgages. The products were from the two Company’s divisions of Wholesale Loan Division and Retail Mortgage Loan Division‚ which was different in terms of sales channel (indirect and direct). The corporation employed almost 1‚000 account
Premium Mortgage loan Mortgage Interest
paying interest on some of these accounts. They pass these funds on to borrowers‚ receiving interest on the loans. Their profits are derived from the spread between the rate they pay for funds and the rate they receive from borrowers. This ability to pool deposits from many sources that can be lent to many different borrowers creates the flow of funds inherent in the banking system. Banks assume two primary types of risk as they manage the flow of money through their business. Interest rate risk
Premium Debt Bank Loan