o. is considering a 5-year, P6,000,000 bank loan to finance service equipment. The loan has an interest rate of 7.5 percent and is amortized over five years with end-of-year payments. National Co. can also lease the equipment for an end-of-year payment of P1,500,000. What is the difference in the actual out of pocket cash flows between the two payments? That is, by how much does one payment exc
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National Co. is considering a 5-year, P6,000,000 bank loan to finance service equipment. The loan has an interest rate of 7.5 percent and is amortized over five years with end-of-year payments. National Co. can also lease the equipment for an end-of-year payment of P1,500,000. What is the difference in the actual out of pocket cash flows between the two payments? That is, by how much does one payment exceed the other?
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- Beyer Company is considering buying an asset for $350,000. It is expected to produce the following net cash flows. Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a minus sign. Round your Payback Period answer to 2 decimal places.)(Please draw cash flow diagram and don't use excel) A loan was to be amortized by a group of four end-of-year payments. The initial payment was to be P5,350 and will increase by P620 every year thereafter. But the loan was renegotiated to provide for the equal payment rather than uniformly varying sums. If the interest rate of the loan was 15% compounded semi-annually, what was the annual payment?A loan of P30,000 is to be repaid monthly for 5 years that will start at the end of 4 years. If interest is 12% converted monthly, how much is the monthly payment? (Draw the cash flow diagram; indicate the artificial payments and the actual payments.)
- an organization has a loaned BD 820,000 to buy the needed machines. The loan holds an interest rate of 5% per year and is to be returned in equal payments over the next seven years. calculate the amount of the annual installment. solve the problem showing cash flow, and final answer using a suitable formula.Castle Company is considering an investment opportunity with the following expected net cash inflows: Year 1, $225,000; Year 2, $165,000; Year 3, $120,000. The company uses a discount rate of 9% and the initial investment is $325,000. F(Click the icon to view Present Value of $1 table.) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) Calculate the NPV of the investment. Should the company invest in the project? Why or why not? Use the following table to calculate the net present value of the project. (Enter any factor amounts to three decimal places, X.XXX.) Net Cash Inflow PV Factor (i = 9%) Years Year 1 Year 2 Year 3 Present value of each year's inflow: (n = 1) Present value of each year's inflow: (n=2) Present value of each year's inflow: (n = 3) Total PV of cash inflows Year 0 Initial investment Net present value of the project example Get more help. Present Value Reference Periods Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 Period 7 Period 8…Hicks Company is considering an investment opportunity with the following expected net cash inflows: Year 1, $235,000; Year 2, $195,000; Year 3, $125,000. The company uses a discount rate of 6% and the initial investment is $365,000. LOADING... (Click the icon to view Present Value of $1 table.) LOADING... (Click the icon to view Present Value of Ordinary Annuity of $1 table.) Calculate the NPV of the investment. Should the company invest in the project? Why or why not? Use the following table to calculate the net present value of the project. (Enter any factor amounts to three decimal places, X.XXX.) Net Cash PV Factor Present Years Inflow (i = 6%) Value Present value of each year's inflow: 1 (n = 1) 2 (n = 2) 3 (n = 3) Total PV of cash inflows…
- Simile Inc. has a total annual cash requirement of P9,075,000 which are to be paid uniformly. Simile has the opportunity to invest the money at 24% per annum. The company spends, on the average, P40 for every cash conversion to marketable securities. What is the Total Opportunity Cost of keeping cash in the bank?A loan for P50,000 is to be paid in 3 years at the amount of P65,000. What is the effective rate of money? Draw the cash flow diagramwith your solution.Ekrita’s evaluation of its cash outlay required indicates that it needs 200,000 for the year. Regardless, of the amount. It incurs 50 to convert Marketable Securities to Cash. The Marketable Securities earn an annual rate of 5%. Lemon does not maintain buffer cash. How much is the Optimal Transaction Size? How much is the Annual Holding Cost as a result of keeping Cash in Bank? How much is the Total Annual Cost of Cash?
- a) A commercial bank is planning to give a loan of $3,000,000 to a firm. The bank expects to charge an up-front fee of 0.15% and a service fee of 0.04%. The loan has a maturity of 10 years. The cost of funds (and the RAROC benchmark) for the commercial bank is 12%. The commercial bank has estimated the risk premium on the loan to be approximately 0.20%, based on three years of historical data. The current market interest rate for loans in this sector is 12.15%. The 99th (extreme case) loss rate for borrowers of this type has historically run at 4%, and the dollar proportion of loans of this type that cannot be recaptured on default has historically been 85%. The 'bank's Return on Equity (ROE) ratio is 13%. Using the risk-adjusted return on capital (RAROC) model, should the commercial bank make the loan? Please show each step of your calculation.5. An amount of 50,000 was borrowed at an interest rate of 10% per year and was to be repaid over a 5-year period with annual payments such that the third payment is P2,000 greater than the first two. The fourth payment is 1,000 greater than the third payment and the fifth payment is 1,000 greater than the fourth payment. Determine the size of the first payment. DRAW THE CASH FLOW DIAGRAM.You pay $1,000 today for the following series of monthly cash flows: 150 0 200 15 300 300 0 100 100 200 -100 What was the NPV of your decision to make this deal? ( Answer is close to $200). *Assume nominal annual discount rate of 12%. * (Edited to add discount rate.)