8.You are looking at a one-year loan of $15,500. The interest rate on a one-year

Question

8.You are looking at a one-year loan of $15,500. The interest rate on a one-year loan is quoted as 11.8 percent plus three points. What is the EAR? (Round your answer to 2 decimal places. (e.g., 32.16))

9.

You have 42 years left until retirement and want to retire with $4.8 million. Your salary is paid annually, and you will receive $76,000 at the end of the current year. Your salary will increase at 2.6 percent per year, and you can earn a 10.0 percent return on the money you invest. If you save a constant percentage of your salary, what percentage of your salary must you save each year?(Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

%

10. The Harrington Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 2.0 percent per period.

12.

Solar Engines manufactures solar engines for tractor-trailers. Given the fuel savings available, new orders for 120 units have been made by customers requesting credit. The variable cost is $9,000 per unit, and the credit price is $11,000 each. Credit is extended for one period. The required return is 1.5 percent per period. If Solar Engines extends credit, it expects that 40 percent of the customers will be repeat customers and place the same order every period forever and the remaining customers will be one-time orders.

$

13. Solar Engines manufactures solar engines for tractor-trailers. Given the fuel savings available, new orders for 185 units have been made by customers requesting credit. The variable cost is $11,600 per unit, and the credit price is $14,250 each. Credit is extended for one period. The required return is 1.9 percent per period and the probability of default is 15 percent. Assume the number of repeat customers is affected by the defaults. In other words, 30 percent of the customers who do not default are expected to be repeat customers.

Calculate the NPV of the decision to grant credit. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Explanation / Answer

Answer:

Effective Annual rate = Quoted rate + 3 points

=11.8 + (3/100)

= 11.8 +0.03

=11.83%

Related Questions

Navigate

• Browse (All)
• Browse 8
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.