A loan is offered with monthly payments and a 6.5 percent APR. what\'s the loan\
ID: 2736636 • Letter: A
Question
A loan is offered with monthly payments and a 6.5 percent APR. what's the loan's effective annual rate (EAR)? 5.69% 6.697% 7.28% 12.63% Asset Management Ratios. Corn Products Crop, ended the year end 2011 with an average collection period of 40 days. The firm's credit sales for 2011 were $9 million. What is the approximate year-end 2011 balance in accounts receivable for com Products? $225,000 $986,300 $4,444,400 $360, 000, 000 When interest rates are lower, borrowers can get loans more easily. Cannot get loans as easily. Borrow more money. Afford higher payments. Given a 5 percent interest rate, compute the present value of deposits made in years 1, 2, 3, and 4 of $4,360.32 $4,665.65 $5,047.62 $5,305.00 Liquidity Ratios Ernie's Mufflers has current liabilities of $45 million. Cash makes up 5 percent of the current assets and accounts receivable makes up another 50 percent of current assets. Ernie's current ratio = 1.5 times. What is the value of inventory listed on the firm's balance sheet? $13.75 m $20.25 m $30.375 m $33.75 mExplanation / Answer
4) Effective Annual Rate = {(1 + 0.65 / 12)12} - 1 = 0.6697 i.e 6.697%
Therefore Correct Answer is option (2) 6.697%
5) Year End 2011 Balance of Accounts Receivable = ($ 90,00,000 / 365) X 40 days = $ 9,86,300.
Therefore, Correct Answer is (2) $ 9,86,300.
7) Determination of Present Value-
Therefore, Correct answer is (2) $ 4665.65
8) Given, Current Liabilities = $ 45 million,
Current Ratio = Current Assets / Current Liabilities = 1.5
Therefore, Current Assets = $ ( 45 X 1.5) = $ 67.5 Millions.
Given Cash = 5% of Current Assets = $ 67.5 X 5% =$ 3.375 Millions
Given Accounts Receivable = 50 % of Current Assets = $ 67.5 X 50% = $ 33.75 Millions
Therefore, the value of inventory on balance sheet = $(67.5 - 3.375 - 33.75) Millions = $ 30.375 Millions.
Therefore, Correct Answer is (3) $ 30.375 Millions.
Year Annual Cash Inflow P.V Factor @ 5% P.V of Cash Inflow 1 $ 1000 0.95238 952.38 2 $ 1400 0.90703 1269.84 3 $ 1400 0.86384 1209.38 4 $ 1500 0.82270 1234.05 Present Value 4665.65Related Questions
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