Business, 02.03.2020 22:14, Alex9089435028
On July 1, 2016, the Southwest Forging Corporation arranged for a line of credit with the First National Bank (FNB) of Dallas. The terms of the agreement call for a $120 comma 000 maximum loan with interest set at 1 percent over prime. In addition, the firm has to maintain a 21 percent compensating balance in its demand deposit account throughout the year. The prime rate is currently 3 percent (assume a 360-day year). a. If Southwest normally maintains a $25 comma 200 to $37 comma 200 balance in its checking account with FNB of Dallas, what is the annualized cost of credit through the line-of-credit agreement when the maximum loan amount is used for a full year? b. Recompute the annualized cost of credit to Southwest if the firm borrows the compensating balance and also borrows the maximum possible under the loan agreement. Again, assume the full amount of the loan is outstanding for a whole year.
Answers: 1
Business, 21.06.2019 20:30, 7841784
Which of the following mechanisms would be most likely to motivate managers to act in the best interests of shareholders? a) decrease the use of restrictive covenants in bond agreements, b) take actions that reduce the possibility of a hostile takeover, c) elect a board of directors that allows managers greater freedom of action, d) increase the proportion of executive compensation that comes from stock options and reduce the proportion that is paid as cash salaries, e) eliminate a requirement that members of the board directors have a substantial investment in the firm's stocks
Answers: 2
Business, 22.06.2019 20:10, Zayybabii
With signals from no-claim bonuses and deductibles, a. the marginal cost curve for careful drivers lies to the left of the marginal cost curve for aggressive drivers b. auto insurance companies insure more aggressive drivers than careful drivers because aggressive drivers have a greater need for the insurance c. the market for car insurance has a separating equilibrium, and the market is efficient d. most drivers pay higher premiums than if the market had no signals
Answers: 1
Business, 22.06.2019 20:40, mom1645
Which of the following is true concerning the 5/5 lapse rule? a) the 5/5 lapse rule deems that a taxable gift has been made where a power to withdraw in excess of $5,000 or five percent of the trust assets is lapsed by the powerholder. b) the 5/5 lapse rule only comes into play with a single beneficiary trust. c) amounts that lapse under the 5/5 lapse rule qualify for the annual exclusion. d) gifts over the 5/5 lapse rule do not have to be disclosed on a gift tax return.
Answers: 1
On July 1, 2016, the Southwest Forging Corporation arranged for a line of credit with the First Nati...
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