Question

. Howe Industries plans to purchase a new extracting machine for $250,000. The company has been...

. Howe Industries plans to purchase a new extracting machine for $250,000. The company has been quoted a rate of 6.5 percent with discount interest and a compensating balance of 2 percent.

      a. How much will Howe Industries have to borrow?

      b. What is the effective rate on this loan?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine...
Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $2,030,000 and will last for 4 years. Variable costs are 38 percent of sales, and fixed costs are $162,000 per year. Machine B costs $4,770,000 and will last for 7 years. Variable costs for this machine are 28 percent of sales and fixed costs are $90,000 per year. The sales for each machine will be $9.54 million per year. The required return...
Rockville Corporation is going to borrow $250,000 from its bank at an APR of 8.5 percent....
Rockville Corporation is going to borrow $250,000 from its bank at an APR of 8.5 percent. The bank requires its customers to maintain a 10 percent compensating balance. What is the effective interest rate on this bank loan? Round to 4 decimal places and enter percentages as a decimal.
Rump Industries is considering the purchase of a new production machine for $100,000. The introduction of...
Rump Industries is considering the purchase of a new production machine for $100,000. The introduction of the machine will result in an increase in earnings before interest and tax of $25,000 per year. Set-up of the machine will involve installation costs of $5,000 after-tax. Additionally, the machine will require workers to undergo training that will cost the company $5,000 after-tax. An initial increase in raw materials and inventory of $25,000 will also be required. The machine has an expected life...
Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine...
Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $2,240,000 and will last for 5 years. Variable costs are 35 percent of sales, and fixed costs are $147,000 per year. Machine B costs $4,360,000 and will last for 9 years. Variable costs for this machine are 31 percent of sales and fixed costs are $109,000 per year. The sales for each machine will be $8.72 million per year. The required return...
Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine...
Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $2,200,000 and will last for 7 years. Variable costs are 35 percent of sales, and fixed costs are $154,000 per year. Machine B costs $4,630,000 and will last for 10 years. Variable costs for this machine are 27 percent of sales and fixed costs are $127,000 per year. The sales for each machine will be $9.26 million per year. The required return...
Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine...
Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $2,140,000 and will last for 7 years. Variable costs are 33 percent of sales, and fixed costs are $175,000 per year. Machine B costs $4,220,000 and will last for 10 years. Variable costs for this machine are 30 percent of sales and fixed costs are $108,000 per year. The sales for each machine will be $8.44 million per year. The required return...
Your company plans to borrow $5 million for 12 months, and your banker gives you a...
Your company plans to borrow $5 million for 12 months, and your banker gives you a stated rate of 17 percent interest.      Calculate the effective rate of interest for the following types of loans.      a. Simple 17 percent interest with a compensating balance of 8 percent. (Use a 360-day year. Input your answer as a percent rounded to 2 decimal places.)    b. Discounted interest (with no compensating balance). (Input your answer as percent rounded to 2 decimal...
Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine...
Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $2,170,000 and will last for 8 years. Variable costs are 40 percent of sales, and fixed costs are $165,000 per year. Machine B costs $4,370,000 and will last for 12 years. Variable costs for this machine are 32 percent of sales and fixed costs are $100,000 per year. The sales for each machine will be $8.74 million per year. The required return...
Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine...
Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $1,810,000 and will last for 4 years. Variable costs are 34 percent of sales, and fixed costs are $147,000 per year. Machine B costs $4,380,000 and will last for 7 years. Variable costs for this machine are 30 percent of sales and fixed costs are $77,000 per year. The sales for each machine will be $8.76 million per year. The required return...
Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine...
Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $3,048,000 and will last for six years. Variable costs are 40 percent of sales, and fixed costs are $195,000 per year. Machine B costs $5,229,000 and will last for nine years. Variable costs for this machine are 35 percent and fixed costs are $130,000 per year. The sales for each machine will be $10.1 million per year. The required return is 11...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT