Questions from Corporate Finance

Q: To borrow $700, you are offered an add-on

To borrow $700, you are offered an add-on interest loan at 9 percent with 12 monthly payments. First, compute the 12 equal payments and then compute the EAR of the loan:

Q: Suppose that Lil John Industries’ equity is currently selling for $37

Suppose that Lil John Industries’ equity is currently selling for $37 per share and that there are 2 million shares outstanding. If the firm also has 30 thousand bonds outstanding, which are selling a...

Q: A car company is offering a choice of deals. You can

A car company is offering a choice of deals. You can receive $500 cash back on the purchase, or a 3 percent APR, 4-year loan. The price of the car is $15,000 and you could obtain a 4-year loan from yo...

Q: A car company is offering a choice of deals. You can

A car company is offering a choice of deals. You can receive $1,000 cash back on the purchase, or a 2 percent APR, 5-year loan. The price of the car is $20,000 and you could obtain a 5-year loan from...

Q: Create the amortization schedule for a loan of $15,000

Create the amortization schedule for a loan of $15,000, paid monthly over three years using a 9 percent APR.

Q: Create the amortization schedule for a loan of $5,000

Create the amortization schedule for a loan of $5,000, paid monthly over two years using an 8 percent APR.

Q: Monica has decided that she wants to build enough retirement wealth that

Monica has decided that she wants to build enough retirement wealth that, if invested at 8 percent per year, will provide her with $3,500 of monthly income for 20 years. To date, she has saved nothing...

Q: Ross has decided that he wants to build enough retirement wealth that

Ross has decided that he wants to build enough retirement wealth that, if invested at 7 percent per year, will provide him with $3,000 of monthly income for 30 years. To date, he has saved nothing, bu...

Q: Rachel purchased a $15,000 car three years ago using

Rachel purchased a $15,000 car three years ago using an 8 percent, 4-year loan. She has decided that she would sell the car now, if she could get a price that would pay off the balance of her loan. Wh...

Q: Why is debt often referred to as leverage in finance?

Why is debt often referred to as leverage in finance?