« previous next »

Author Question: To expand its operation, the International Tools Inc (ITI) has applied for a 3,500,000 loan from the ... (Read 97 times)

Haya94

  • Hero Member
  • *****
  • Posts: 558
on: Jul 10, 2018
To expand its operation, the International Tools Inc (ITI) has applied for a 3,500,000 loan from the International Bank. According to ITI's financial manager, the company can only afford a maximum yearly loan payment of 1,000,000.
 
  The bank has offered ITI, (1 ) a 3-year loan with a 10 percent interest rate, (2 ) a 4-year loan with a 11 percent interest rate, or (3 ) a 5-year loan with a 12 percent interest rate.
  (a) Compute the loan payment under each option.
  (b) Which option should the company choose?

Question 2

The responsibility for managing day-to-day operations and carrying out corporate policies belongs to the ________.
 
  A) board of directors
  B) chief executive officer
  C) stockholders
  D) creditors


briezy

  • Sr. Member
  • ****
  • Posts: 347
Reply #1 on: Jul 10, 2018
Answer to Question 1

(a)
(1 ) Using financial calculator: PV=3500000, N=3, FV=0, I = 10, CPT PMT = 1,407,402
(2 ) Using financial calculator: PV=3500000, N=4, FV=0, I = 11, CPT PMT = 1,128,304.32
(3 ) Using financial calculator: PV=3500000, N=5, FV=0, I = 12, CPT PMT =  970,873.79
(b) The company should choose option 3.

Answer to Question 2

B


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question

Haya94

  • Hero Member
  • *****
  • Posts: 558
Reply #2 on: Jul 10, 2018
Correct answers!


briezy

  • Sr. Member
  • ****
  • Posts: 347
Reply #3 on: Jul 10, 2018
Great! Please up vote :D


« previous next »
 

Did you know?

Prostaglandins were first isolated from human semen in Sweden in the 1930s. They were so named because the researcher thought that they came from the prostate gland. In fact, prostaglandins exist and are synthesized in almost every cell of the body.

Did you know?

The Centers for Disease Control and Prevention (CDC) was originally known as the Communicable Disease Center, which was formed to fight malaria. It was originally headquartered in Atlanta, Georgia, since the Southern states faced the worst threat from malaria.

Did you know?

The first oncogene was discovered in 1970 and was termed SRC (pronounced "SARK").

Did you know?

If you could remove all of your skin, it would weigh up to 5 pounds.

Did you know?

Barbituric acid, the base material of barbiturates, was first synthesized in 1863 by Adolph von Bayer. His company later went on to synthesize aspirin for the first time, and Bayer aspirin is still a popular brand today.

Kara Walker, Insurrection! (Our Tools Were Rudimentary, Yet We Pressed On). Kara Walker, Insurrection! (Our Tools Were Rudimentary, Yet We Pressed On).
Region’s Culture in International Context Region’s Culture in International Context
Climate change by international treaty Climate change by international treaty
International Management: Managing Across Borders and Cultures International Management: Managing Across Borders and Cultures
Seven students have applied for merit scholarships. This year 3 merit scholarships were ... Seven students have applied for merit scholarships. This year 3 merit scholarships were ...
No payments were made on a $2,598 loan during its three-year term. What was the annually ... No payments were made on a $2,598 loan during its three-year term. What was the annually ...
Video: Introduction to Autism

For a complete list of videos, visit our video library