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You are a Owner of a Donut Shop. You want to ask the bank for a loan to complete a rennovation. The loan is backed
You are a Owner of a Donut Shop. You want to ask the bank for a loan to complete a rennovation. The loan is backed by the future two year profits of the hotel.
Hotel Expected Earnings:
In mos. $
In yr $
In yr $
In yr $
Bonds availible for trading:
TNote Maturity: yr Face: $ Coupon: Semiannual Trades at Par
TNote Maturity: yr Face: $ Coupon: Semiannual Trades at $
TBill Maturity: yr Face: $ Coupon: Semiannual Trades at $
TBill Maturity: yr Face: $ Coupon: Semiannual Trades at $
Question:
a What is the largest loan the bank would be willing to give you?
b If there is an expected inflation rate of every mos., what is the largest loan the bank would be willing to give you?
c TNotes have changed, new TNote:
TNote Maturity: yr Face: $ Coupon: Semiannual Trades at Par
Now what's the largest loan the bank will make you and comment on what the differences are from the first question.
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