Question
1. We have a $100,000 line of credit with a 15% compensating balance requirement. The quoted interest rate is 8%. We need to borrow $40,000
1. We have a $100,000 line of credit with a 15% compensating balance requirement. The quoted interest rate is 8%. We need to borrow $40,000 for inventory for one year. How much do we need to borrow?
2. You are considering a project that will require an initial outlay of $200,000. This project has an expected life of five years and will generate after-tax cash flows to the company as a whole of $60,000 at the end of each year over its five-year life. Thus, the free cash flows associated with this project look like this:
Given a required rate of return of 10% percent, calculate the following:
- Profitability index
- IRR
Please show all the answer step by step, thanks!
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started