Questions from Financial Management

Q: Talmud Book Company borrows $24,900 for 60 days at

Talmud Book Company borrows $24,900 for 60 days at 12 percent interest. What is the dollar cost of the loan?

Q: McGriff Dog Food Company normally takes 27 days to pay for average

McGriff Dog Food Company normally takes 27 days to pay for average daily credit purchases of $9,530. Its average daily sales are $10,680, and it collects accounts in 32 days. a. What is its net credit...

Q: Maxim Air Filters Inc. plans to borrow $300,000

Maxim Air Filters Inc. plans to borrow $300,000 for one year. Northeast National Bank will lend the money at 10 percent interest and requires a compensating balance of 20 percent. What is the effectiv...

Q: Digital Access Inc. needs $400,000 in funds for

Digital Access Inc. needs $400,000 in funds for a project. a. With a compensating balance requirement of 20 percent, how much will the firm need to borrow? b. Given your answer to part a and a stated...

Q: Randall Corporation plans to borrow $233,000 for one year

Randall Corporation plans to borrow $233,000 for one year at 20 percent from the Waco State Bank. There is a 21 percent compensating balance requirement. Randall Corporation keeps minimum transaction...

Q: The treasurer for the Macon Blue Sox baseball team is seeking a

The treasurer for the Macon Blue Sox baseball team is seeking a $23,600 loan for one year from the 4th National Bank of Macon. The stated interest rate is 10 percent, and there is a 15 percent compens...

Q: Your company plans to borrow $13 million for 12 months,

Your company plans to borrow $13 million for 12 months, and your banker gives you a stated rate of 24 percent interest. You would like to know the effective rate of interest for the following types of...

Q: If you borrow $5,300 at $400 interest for

If you borrow $5,300 at $400 interest for one year, what is your effective interest rate for the following payment plans? a. Annual payment. b. Semiannual payments. c. Quarterly payments. d. Monthly p...

Q: United Technology Corporation (UTC) has $40 million of convertible

United Technology Corporation (UTC) has $40 million of convertible bonds outstanding (40,000 bonds at $1,000 par value) with a coupon rate of 11 percent. Interest rates are currently 8 percent for bon...

Q: Zerox Copying Company plans to borrow $172,000. New

Zerox Copying Company plans to borrow $172,000. New Jersey National Bank will lend the money at one-half percentage point over the prime rate at the time of 17½ percent (18 percent total) and requires...