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(1)
For National Bank:
Prime bank loan rate=3.25%
http://research.stlouisfed.org/fred2/series/MPRIME?
cid=117
So National first Interest rate=3.25%+6.75%=10% paid semiannually
Hence,
Effective Annual rate for National First = ((1+ (10%/2)) ^2)1 =
10.25%
For Regions Best:
Interest rate=13.17% paid monthly
Hence,
Effective Annual Rate for Region's Best = ((1+ (13.17%/12)) ^12)1 =
13.99%
(2)
Based on the above information it can be said that National First bank is the best
choice because it has the lowest interest rate and choosing this would reduce the cost of
debt for the company.
(3)
Given that,
Loan amount=$6,950,000
APR=8.6%
So monthly rate of interest=8.6%/12=0.72%
Times to maturity=5 years
So, number of monthly payment required=60
Hence,
Monthly payment =
$142,925.09
(Calculated using payment function in excel)
Task II:
(1)
For Raytheon Co. (RTN):
Stock Price=$46.69
Dividend paid=$0.31 Quarterly
So, Annual Dividend payment=4*$0.31=$1.24
Dividend Growth=5%
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 Spring '10
 jALE
 Interest, Interest Rate

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