{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

BUSN 379

# BUSN 379 - Task I(1 For National Bank Prime bank loan...

This preview shows pages 1–3. Sign up to view the full content.

Task I: (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% Hence, Required rate of return for Raytheon = (1.24/46.69)+5% =  7.66% For Boeing Co. (BA): Stock Price=\$63.84

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Dividend paid=\$0.42 Quarterly
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern