Homework 6 Solution

Homework 6 Solution - LAST NAME: _ FIRST NAME_PUID_...

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LAST NAME: _____________ FIRST NAME______________PUID_________________ Management 200 – Introductory Financial Accounting– Maymester 2010 Krannert School of Management - Purdue University Homework 6 – due Monday, June 7, 2010 - SOLUTION IMPORTANT: This homework must be turned in on this sheet of pages (please staple). It is preferred that you print it out two-sided if at all possible. Assignments not completed on this form will not be graded. The grade for this assignment will be based on the correctness of a partial portion of the assignment – the full assignment will not be graded. Please print your name and PUID clearly and legibly in the spaces above. Carp Inc. is looking at four alternative financing arrangements to raise $1,000,000 for a ten-year term on January 1, 2010. The four alternatives are: 1. Borrow the money from The Big Bank. The loan would have a face value of $1,000,000 and would have an interest rate of 9%. Interest would be paid annually on December 31 each year. This loan is an interest-only loan and no principal would be repaid until maturity. 2. Borrow the money from Small Insurance. The loan would have a face value of $1,000,000 and would have an interest rate of 9%. The loan would be repaid in 10 equal annual payments with the first payment due on December 31, 2010. The annual payments are sufficient to repay the loan and interest over the ten-year
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Homework 6 Solution - LAST NAME: _ FIRST NAME_PUID_...

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