a. When the firm repays the original $7,050.000 loan this year, what will be the effective purchasing power of the $7,050,000? (Hint Divide the loan amount by one plus cumulative inflation.) (Do not round intermediate calculations and round your answer to the nearest whole dollar.) Efective purchasing power b. To maintain the original $7,050,000 purchasing power, how much should the lender be repaid? (Hint: Multiply the loan amount by one plus cumulative inflation.) (Do not round intermediate calculations and round your answer to the nearest whole dollar.) Loan repayment
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- Twelve years ago, the Archer Corporation borrowed $6,850,000. Since then, cumulative inflation has been 80 percent (a compound rate of approximately 5 percent per year). a. When the firm repays the original $6,850,000 loan this year, what will be the effective purchasing power of the $6,850,000? (Hint: Divide the loan amount by one plus cumulative inflation.) (Do not round intermediate calculations and round your answer to the nearest whole dollar.) Effective purchasing power b. To maintain the original $6,850,000 purchasing power, how much should the lender be repaid? (Hint: Multiply the loan amount by one plus cumulative inflation.) (Do not round intermediate calculations and round your answer to the nearest whole dollar.) Loan repaymentFourteen years ago, the U.S. Aluminum Corporation borrowed $6.5 million. Since then, cumulative inflation has been 98 percent (a compound rate of approximately 65 percent per year). a. When the firm repays the original $6.5 million loan this year, what will be the effective purchasing power of the $6.5 million? (Hint: Divide the loan amount by one plus cumulative inflation.) b. To maintain the original $6.5 million purchasing power, how much should the lender be repaid? (Hint: Multiply the loan amount by one plus cumulative inflation.) c. If the lender knows he will receive $6.5 million in payment after 14 years, how might he be compensated for the loss in purchasing power? A descriptive answer is acceptable.Your company is planning to borrow $2.75 million on a 5-year, 16%, annual payment, fully amortized term loan. What fraction of the payment made at the end of the second year will represent repayment of principal? Do not round intermediate calculations. Round your answer to two decimal places.
- An investment will pay $20,900 at the end of next year for an investment of $20,000 at the start of the year. If the bank offers an interest of 2.5% over the same period, what is the net value of the decision to proceed with the investment in terms of dollars today? Hint: The net value in terms of dollars today is the net value computed at time zero. -$500 + $500 -$400 +$390 +$400 -$390A firm, whose cost of capital is 8 percent, may acquire equipment for $146,825 and rent it to someone for a period of five years. Note: Although payment of rent is typically considered to be an annuity due, treat it as an ordinary annuity when completing this problem in a spreadsheet or when using present value factors. If the firm charges $38,730 annually to rent the equipment, what are the net present value and the internal rate of return on the investment? Use Appendix D to answer the questions. Use a minus sign to enter negative values, if any. Round your answers for the net present value to the nearest dollar and for the internal rate of return to the nearest whole number. NPV: $ IRR: % Should the firm acquire the equipment? The firm acquire the equipment as the net present value is , and the internal rate of return the firm's cost of capital. If the equipment has no estimated residual value, what must be the minimum annual rental charge for the firm to earn the required 8…Your company is expected to earn (as a cash flow) $3 million next year, $3.06 million the following year, $31212 the year after that, and it will continue to grow by 2% per year indefinitely. Using a discount rate of 8%, what is the value of the сompany? (Do not round intermediate calculations. Report your result in millions of dollars. Round the final answers to 2 decimal places. Omit $ sign and the word "million" in your response. For example, if your answer is $1,234,567 just write 1.23)
- Wasup Corp. is thinking of borrowing $190,000 from its bank at 8% annual interest rate. The amount that will be repaid is $325,626. Assume annual compounding. In approximately how many years will Wasup Corp. need to repay the loan? Use the future value of $1 factor table shown below.Excerpt of Future Value of $1 Table Periods 7% 8% 9% 1 1.07000 1.08000 1.09000 2 1.14490 1.16640 1.18810 3 1.22504 1.25971 1.29503 4 1.31080 1.36049 1.41158 5 1.40255 1.46933 1.53862 6 1.50073 1.58687 1.67710 7 1.60578 1.71382 1.82804 Group of answer choices 7 years 4 years 6 years 5 yearsVan Buren Resources Inc. is considering borrowing $100,000 for 202 days from its bank. Van Buren will pay $3,000 of interest at maturity, and it will repay the $100,000 of principal at maturity. Assume that there are 365 days per year. Calculate the loan’s annual percentage rate. Round your answer to two decimal places. %Use the information below for the next two problems. Schlitz Inc. has obtained a 90-day bank loan of $10,000 with an annual interest rate of 15%, payable at maturity. Assume a 365-day year. a. How much dollar interest will the firm pay on the 90-day loan? : b. Find the 90-day interest rate on the loan.
- Block Associates borrowed $100,000. The company plans to put aside money to repay the loan after 20 years. Assume a 6% interest rate compounded semiannually. What must Block Associates put aside each period? PROVIDE THE FOLLOWING FOR EACH PROBLEM N= I= PV= PMT= FV= C/Y= P/Y =You just borrowed $800,000 using a 25 year home loan that's interest-only for the first 2 years, and principal and interest (P&I) for the remaining 23 years. The interest rate is 7.2% pa compounding monthly which is not expected to change. Which of the following statements is NOT correct? Select one: a. The effective monthly rate is 0.006 per month, given as a decimal. If the interest rate rises, the IO and P&I monthly payments will rise. b. If the IO term was one year longer so the P&I term was one year shorter, then the monthly payments over the P&I term would be lower. c. The IO loan's perpetuity factor' is 166.666667, while the P&I loan's annuity factor is 134.691997. d. The IO loan payments will be $4,800 per month, rounded to the nearest cent. e. The P&I loan payments will be $5,939.48 per month, rounded to the nearest cent. Clear my choiceA firm has borrowed $5,000,000 for 5 years at 10% per year compound interest. The firm will make no payments until the loan is due, when it will pay off the interest and principal in one lump sum. What is the total payment?