compensating balance. What is the total required compensating balance the firm must maintain? SOLUTION ð$500‚000 _ 0:15Þ þ ð$200‚000 _ 0:11Þ ¼ $97‚000 Proceeds of Loan. Assume the same information as in Problem 5.4‚ except that interest is deducted in advance. (a) What is the amount of proceeds the company will receive at the time of the loan? (b) What is the effective interest rate? 144 SHORT-TERM FINANCING [CHAP. 5 Asif Warsi SOLUTION (a) Interest ¼ $70‚000 _ 0:19 ¼ $13‚300 Proceeds ¼ principal
Premium Accounts receivable Debt Bond
FINS3630- Semester 1 2014 Notes Financial Service and Industry and Specialness of FIs Financial Intermediaries’ Specialness Financial intermediaries’ function Brokerage Function Agent for investors Reduce costs (economies of scale) Asset Transformation Purchase primary securities by selling financial claims (secondary securities) to households Secondary securities are more marketable BECAUSE Less information asymmetry Less monitoring costs More liquid Less risky Without financial
Premium Debt Loan Interest
sales‚ SureCut is facing difficulty in paying its short term loan obligations to Hudson National Bank. After thorough analysis‚ the need for short term fund requirements should not be used in capital expenses since the cash needed to repay the short term fund requirements comes from the sales of inventory which was the intention of the additional cash to stock up more inventories. In June 1995 Surecut Shears got a working capital loan amount of $3‚5 million from Hudson National Bank to cover the
Premium Balance sheet Financial ratios Inventory
Question: IDENTIFY THE SOURCES OF FINANCE AVAILABLE TO A BUSINESS Answer: There are a number of ways of raising finance for a business. The type of finance chosen depends on the nature of the business. Large organisations are able to use a wider variety of finance sources than are smaller ones. Finance is not just needed when starting a new business‚ but you may be required to seek further finance even if you’re business is well established i-e further expansion‚ R&D‚ new product launch
Premium Debt Time Finance
Hassan‚ Harjeet and Henry should raise the working capital through loan capital rather than share capital. Intention to expand the business‚ Hassan‚ Harjeet and Henry need to raise RM2 million working capital but none of them able to contribute any capital on right issue share for the expansion of business. However‚ 3Bros Berhad have a retail shop worth RM 3million in Pavilion as Restaurant 1Malaysia which in accordance with Section 21(1) and 21(2) Company Act 2016‚ company have full power to operate
Premium Debt Debt Finance
The Muthoot Gold loan portfolio is the largest in India as well as all around the globe. It is humbling to know that more than 80‚000 people avail our trusted services on a daily basis. For the past 126 years‚ the company has been serving the interests of customers as its top most priority. Our journey through centuries coupled with the fact that we are still a rapidly growing company highlights the trust and commitment that our customers worldwide have shown in us. With Muthoot Finance Ltd
Premium Interest Loan Debt
economic life. Cost of acquiring the machine is 500‚000. If we suppose that FCI is able to convince banks to loan $500‚000 to invest in the envelope machine‚ we can first use FCI’s normal interest rate on bank credit (11%: 8‚5% prime + 2‚5% FCI marginal) as a discount rate to count the project’s NPV. Here we also assume that FCI will pay the loan back in two and half years. Year CF Disc. CF Loan due: Int. Exp.: 0 -500 -500 1 218 196‚40 218 55‚00 2 218 176‚93 218 65‚45 3 218 159‚40 64 23‚53
Premium Debt Finance Balance sheet
to fund enterprises with a smaller number of high value loans. This intermediation through a well functioning bank helps to achieve some economic benefits for the depositors‚ the borrowers and above all -- the economy. The Bank must allocate loans effectively for achieving these broad objectives of the Economy. While identifying profitable enterprises‚ the Bank – in fact -- identifies risks of the borrower and business in order to allow loan in the context of its risk–return profile. In other words
Premium Interest Credit Loan
projects‚ RDA was looking at a$950 million term loan agreement with a syndicate of banks and other financial institutions.” The loan would be secured by the firm’s assets and included strict covenants. The loan agreement called for quarterly principal repayments‚ starting in the first quarter of fiscal 2003‚ with the final payment due in 2008. RDA expected the interest rate on all of its borrowings would be 3.8% in 2002 and 6% for the remaining years of the loan. In the past‚ RDA had been conservative
Premium Debt Finance Stock
unfavorable to Thorne. Instead‚ our group advises Thorne to approach the Thorne family trust for a loan of R1 million if possible. Based on historical loans made by the trust‚ Thorne would receive more favorable terms on a loan from the foundation than a bank. We advise Thorne to negotiate a loan with a 2.5% interest rate. The loan principle should be paid off over 10 years in equal payments of R100 thousand. The loan should be used to build the new facilities during year 2011. During year 2011‚ the revenues
Premium Balance sheet Accounts receivable Generally Accepted Accounting Principles