You are the CFO of a publicly traded corporation, and as a part of your responsibilities you arrange loans for various short term and long term funding requirements. The investment bank who provides those loans has submitted to you a list of terms.

Please Show how you got the Answer*** You are requesting a $8,000,000 loan with a term of 4 months for short term financing needs, payroll, Christmas bonuses to employees, accounts payable, etc., the investment bank will require your firm to repay $8,110,000 at the end of those three months. What is the APR and EAR?

Please Show how you got the Answer*** You had also requested terms for a 7 year loan for the purpose of purchasing new machinery and equipment. For $19,000,000 today, the investment bank requires $23,550,000 at the end of seven years. What is the interest rate?

Please Show how you got the Answer*** The CEO is also considering building a new factory, and he has asked you to inquire about the rate on a $32,000,000 loan for 30 years. The bank has informed you that for $32,000,000 now, your firm would need to repay the $32,000,000 at the end of 30 years, but also make an annual interest payment of $1,600,000 each year. What is the interest rate?

Please Show how you got the Answer*** Sketch a graph of the yield curve which your company faces for their costs of borrowing.

Based on your previous answer, do you think that now is a good time to build a new factory? Why?