1. What is the effective annual interest rate on a P5 million loan with an interest rate of 8%, a commitment fee of 0.25%, and a compensating balance of 10%?
2. (TRUE OR FALSE)A firm negotiates a one-year loan for P1 million with an interest rate of 12%. The commitment fee is 0.25% of the total amount, and the compensating balance is 10% of the line. The effective annual interest rate is 13.6%.
3. Serbia Company generated P2,000,000 in sales during 2020, and its year-end assets were P1,500,000. Also, at year-end 2020, current liabilities were P500,000, consisting of P200,000 of notes payable P200,000 accounts payable, and P100,000 accrued liabilities. Looking ahead to 2021, the company estimates that its assets must increase by P0.75 for every P1.00 increase in sales. The company's profit margin is 5% and its retention ratio is 40%. How large of a sales increase can the company achieve without having to raise funds externally? (To the nearest whole number for the final answer)
4. If a firm borrowed P500,000 at a rate of 10% simple interest with monthly interest payments and a 365-day year, what would be the required interest payment for a 30-day month? [round off to 2 decimal places]
5. Refer to number 4. If interest must be paid monthly, what would be the effective annual rate? [% form 2 decimal places]
6. Daphne Company can issue three-month commercial paper with a face value of P3,000,000 for P2,940,000. The transaction cost would be P3,600. What is the annualized percentage cost of the financing? [% form 2 decimal places]