« previous next »

Author Question: To expand its operation, the International Tools Inc (ITI) has applied for a 3,500,000 loan from the ... (Read 83 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?

Acute bronchitis is an inflammation of the breathing tubes (bronchi), which causes increased mucus production and other changes. It is usually caused by bacteria or viruses, can be serious in people who have pulmonary or cardiac diseases, and can lead to pneumonia.

Did you know?

There are approximately 3 million unintended pregnancies in the United States each year.

Did you know?

Adults are resistant to the bacterium that causes Botulism. These bacteria thrive in honey – therefore, honey should never be given to infants since their immune systems are not yet resistant.

Did you know?

In 1886, William Bates reported on the discovery of a substance produced by the adrenal gland that turned out to be epinephrine (adrenaline). In 1904, this drug was first artificially synthesized by Friedrich Stolz.

Did you know?

In ancient Rome, many of the richer people in the population had lead-induced gout. The reason for this is unclear. Lead poisoning has also been linked to madness.

Pulse oximetry with the sensor probe applied securely, flush with skin, making sure that both sensor Pulse oximetry with the sensor probe applied securely, flush with skin, making sure that both sensor
Sixteen-pin OBD II DLC with terminals identified. Scan tools use the power pin (16) ground pin (4) ... Sixteen-pin OBD II DLC with terminals identified. Scan tools use the power pin (16) ground pin (4) ...
Change in air temperature at various air flow rates for a 7 pass operation Change in air temperature at various air flow rates for a 7 pass operation
International Business: The Challenges of Globalization, 8th Edition International Business: The Challenges of Globalization, 8th Edition
Social Media Tools for Education Social Media Tools for Education
Use a graphical method to find the length of the loan to the nearest year Use a graphical method to find the length of the loan to the nearest year
Video: Four Giant Convection Cells oF Earth

For a complete list of videos, visit our video library