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FIN 200 WEEK 7 Assignment Loan Scenarios

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WEEK 7 Assignment: Loan Scenarios
Assignment: Loan Scenario
Midland Chemical Co.
Pp. 250- 251
A. The 9.75% interest rate is the better way to go.
8.25%
500,000 x 8.25% = 41,250
500,000 + 41,250= 541,250
541,250 x 20% = 108, 250
541,250 + 108,250 = 649,500
9.75%
500,000 x 9.75% = 48,750
500,000 + 48,750 = 548,750
548,750 + 5,500 = 554,250
B. 2 x 12 x 41,250 = 990,000 =
13 x 500,000 = 6,500,000 =

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Answer 15.23 %
C. 41,250 x 360 = 41,250
500,000 - 100,000 x 360 = 400,000
41,250/ 400,000 = 10.3125%
Yes the firm should borrow the funds.
D. Yes otherwise the rate would be much higher.
41,250 x 360 =
500,000 x 80 =
8.25% x 4.5% = 37.125%
E. 10.25%
500,000 x 10.25% = 51,250
500,000 + 51,250 = 551,250

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WEEK 7 Assignment: Loan Scenarios Assignment: Loan Scenario Midland Chemical Co. Pp. 250- 251 A. The 9.75% interest rate is the better way to go. 8.25% 500,000 x 8.25% = 41,250 500,000 + 41,250= 541,250 541,250 x 20% = 108, 250 541,250 + 108,250 = 649,500 9.75% 500,000 x 9.75% = 48,750 500,000 + 48,750 = 548,750 548,750 + 5,500 = 554,250 B. 2 x 12 x 41,250 = 990,000 = 13 x 500,000 = 6,500,000 = Answer 15.23 % C. 41,250 x 360 = 41,250 500,000 - 100,000 x 360 = 400,000 41,250/ 400,000 = 10.3125% Yes the firm should borrow the funds. D. Yes otherwise the rate would be much higher. 41,250 x 360 = 500,000 x 80 = 8.25% x 4.5% = 37.125% E. 10.25% 500,000 x 10.25% = 51,250 500,000 + 51,250 = 551,250 551,250 x 20% = 110,250 551,250 + ...
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