Author Question: To expand its operation, the International Tools Inc (ITI) has applied for a 3,500,000 loan from the ... (Read 87 times)

Haya94

  • Hero Member
  • *****
  • Posts: 558
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
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


 

Did you know?

When taking monoamine oxidase inhibitors, people should avoid a variety of foods, which include alcoholic beverages, bean curd, broad (fava) bean pods, cheese, fish, ginseng, protein extracts, meat, sauerkraut, shrimp paste, soups, and yeast.

Did you know?

Amphetamine poisoning can cause intravascular coagulation, circulatory collapse, rhabdomyolysis, ischemic colitis, acute psychosis, hyperthermia, respiratory distress syndrome, and pericarditis.

Did you know?

In 2010, opiate painkllers, such as morphine, OxyContin®, and Vicodin®, were tied to almost 60% of drug overdose deaths.

Did you know?

Sildenafil (Viagra®) has two actions that may be of consequence in patients with heart disease. It can lower the blood pressure, and it can interact with nitrates. It should never be used in patients who are taking nitrates.

Did you know?

There can actually be a 25-hour time difference between certain locations in the world. The International Date Line passes between the islands of Samoa and American Samoa. It is not a straight line, but "zig-zags" around various island chains. Therefore, Samoa and nearby islands have one date, while American Samoa and nearby islands are one day behind. Daylight saving time is used in some islands, but not in others—further shifting the hours out of sync with natural time.

For a complete list of videos, visit our video library