Question
A business purchases 3 new press machines for $150,000 each or a total of $450,000. It borrows $315,000 from its local bank. The interest rate
A business purchases 3 new press machines for $150,000 each or a total of $450,000. It borrows $315,000 from its local bank. The interest rate on the loan is 6%, the loan term is 7 years. The loan is a closed end credit loan. Depreciation is $45,000 per year on the presses. What is the loan to value ratio for this loan?
A. 40%
B. 60%
C. 50%
D. 70%
The trend for cost of goods sold is it is decreasing as a percentage of sales and the trend for total marketing costs as a percentage of sales is increasing. What does this suggest to the company CEO?
A. The CEO would want to analyze the company's cost of capital
B. The CEO would want to analyze the company's margin % and asset utilization
C. The CEO would want to analyze whether operations has done something that reduces production costs, but that has also made the product less attractive in the customers eyes
D. The CEO would want to analyze the companys cost structure particularly the contribution margin ratio, the relevant ranges for fixed expenses and the companys marketing and production expenses
What is the monthly interest expense for the following open-end credit loan? Loan balance of $80,000, annual percentage rate (APR) is 8%, and there are 30 days in the month.
A. $600
B. $800
C. $700
D. $500
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