ATI Mining has applied for a loan of $8 million from Bank United. The typicial servicing fee that Bank United charges is 80 basis points. The maturity of the loan will be 9 years with a duration of 7.6 years. Bank United has a cost of funds (the RAROC benchmark) of 11 per cent. The credit analyst of the bank estimates that the maximum change in the risk premium for the iron ore sector is around 5.0 per cent, based on three years of historical data. The current market interest rate for loans in the iron ore sector is 13.6 per cent. Explain if Bank United should approve this loan.

Answers

Answer 1

Bank United, based on the RAROC benchmark and the loan amount among others, should not approve the loan.

Why would they not approve the loan ?

First, find the net interest:

Interest Income on Loan:

= $8,000,000 x 13.6%

= $10,88,000

Serving Fee:

= $80,00,000  x 0.008

=$64,000

Total Earnings:

= $10,88,000 + 64,000

= $1,152,000

Cost of Fund to Bank:

= $8,000,000 * 11%

= $ 880,000

Net Income is therefore:

= 1,152,000 - 880,000

= $ 272,000

Use this to find the RORAC:

= Net income / Loan risk x 100 %

= 272, 000 / ( 7. 6 years x 8, 000, 000 x 0. 05 / ( 1 + 0. 136 ) )

= 10. 16 %

The RORAC is less than the cost of funds of 11 % so Bank United should not approve this loan.

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Related Questions

What would happen if a state or municipality suddenly lost its tax base? Explain if this would have any impact on it's cost of borrowing funds. Why?

Answers

Answer:

Following are the responses to the given question:

Explanation:

The tax base seems to be the amount that is added to both the income tax, that is which tax rate is the percentage of national economy collected as just a tax. Consequently, it is important to find an income tax that understands the tax base.

Whether this amount of tax would pay is not declared or decided if the state or city suddenly loses its local economy.

Impact mostly on the cost of credit

Its cost of debt before tax rebate funds = interest amount on the debt – any reduction in income tax which rose because of deductible profits. The costs of lending are real games calculated in anticipation of tax, however, the difference is DEDUCTIBLE in INTEREST EXPENSES.

This tax rate also increases the cost of lending and gives more income protection.

It's because when taxes become available, the company can save money on tax returns as it ultimately removes some profits.

Conclusion:

However it is lost about the tax base, however, the judgment could not be made afterward the amount to borrow as debt could be evaluated of that "TAX REVENUE OFFSET."

The complexity and challenges associated with planning for and executing an operation include.

Answers

Answer:

One of the two equal sides of an isosceles triangle is 5.4cm . If the perimeter of the triangle is 15.4cm find the length of remaining side of the triangle.

Ethical behavior is a subset of which skillset?

professional skills

technical skills

professional conduct

interpersonal skills

Answers

Answer:

C). Professional Conduct

Explanation:

Ethical behavior is characterized as the obedience of moral principles like fairness, honesty, and equity. Such behavior recognizes the individual diversity and offers equal rights and respect to the dignity and integrity of every individual. It is one of the significant aspects of 'professional conduct' which promotes professionalism, healthy work relationships, mutual understanding, and maximize the output. Thus, option C is the correct answer.

Answer: Professional conduct is the answer

Explanation:

I just took the quiz and got the answer right

boi, why am i alive.-

Answers

Ahah relatable but anyways u good?

Answer: so you can grow older

Explanation:

1. A complete income statement potentially has the following sections: (1 point)
a. Items from continuing operations and earnings per share for a corporation.
b. Income or loss from operating a discontinued segment for the current period.
c. The loss from disposing of the discontinued segment's net assets.
d. Extraordinary items.
e. Continuing operations, discontinued segments, extraordinary items, changes in accounting principles, and earnings per share for a corporation.
2.Phoenix Company reported sales of $400,000 for 2009, $450,000 for 2010, and $500,000 for 2011. Using 2009 as the base year, what were the percentage increases for 2010 and 2011 compared to the base year? (1 point)
a. 80% for 2010 and 90% for 2011.
b. 88% for 2010 and 80% for 2011.
c. 88% for 2010 and 90% for 2011.
d. 112.5% for 2010 and 125% for 2011.
e. 125% for 2010 and 112.5% for 2011.
3.Comparative financial statements in which each amount is expressed as a percentage of a base amount are called: (1 point)
a. Asset comparative statements.
b. Percentage comparative statements.
c. Common-size comparative statements.
d. Sales comparative statements.
e. General-purpose financial statements.

Answers

The following elements could be seen in a complete income statement: income or loss from operating a discontinued segment for the current quarter.

What exactly does "income statement" mean?

One of the three key financial statements that reflects a company's financial performance over a certain accounting period is the income statement.One of a company's financial accounts, an income statement or profit and loss account, lists the company's revenues and costs for a specific time period. It describes the process through which revenues are converted into net income or net profit.

What additional queries have answers?

112.5% for 2010 and 125% for 2011 are the percentage increase.

Common-size comparative financial statements are comparative financial statements where each number is expressed as a percentage of a base amount.

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How does technology trends affect a pharmacy business?

Answers

Answer: Artificial Intelligence or Machine Learning.

Explanation:

Artificial Intelligence or Machine Learning offers multiple benefits such as data processing, enabling pharmacists to make quicker data-backed decisions, and improving customer service. With the Internet of Things, drug inventory management will be more accurate and faster; through device-to-device communication.

What types of information are found on a balance sheet ? (Select all that apply.)

total bank equity capital
total liabilities
interest expense
total assets

Answers

C) Interest expense.
Total bank equity capital
Total liabilities
Total assets

These are all found on the balance sheet.

Krishna is 56 years old; he has contributed to the CPP without interruption for over 30 years. While crossing the street, Krishna was struck by a bus and seriously injured. He is currently hospitalized and on life support and his doctors have informed Krishna's family that it is uncertain as to whether he will awaken from his coma. Assuming at the time of his accident, Krishna was entitled to a CPP retirement benefit of $660, the flat-rate disability amount is $496.36 per month and the maximum monthly disability benefit is $1362.30, how much of a disability benefit will Krishna receive under the CPP? a) 50 b) $865.94 C) $991.36 d) $1156.36

Answers

Option(A) is the correct answer. Krishna will receive a disability benefit of $660 under the CPP.

To determine the disability benefit that Krishna will receive under the CPP, we need to consider a few factors. First, let's calculate the disability benefit based on the provided information:

The flat-rate disability amount is $496.36 per month.

The maximum monthly disability benefit is $1362.30.

Krishna's entitlement to a CPP retirement benefit is $660 per month.

To calculate the disability benefit, we compare the retirement benefit to the flat-rate disability amount and the maximum monthly disability benefit:

The disability benefit will be the lesser of:

The retirement benefit ($660)The flat-rate disability amount ($496.36) plus the retirement benefit minus the flat-rate disability amount.

Let's calculate the disability benefit based on the above formula:

Disability benefit = min(retirement benefit, flat-rate disability amount + retirement benefit - flat-rate disability amount)

= min($660, $496.36 + $660 - $496.36)

= min($660, $660)

= $660

Therefore, Krishna will receive a disability benefit of $660 under the CPP.

Option (a) 50, option (b) $865.94, option (c) $991.36, and option (d) $1156.36 are not correct based on the given information. The correct answer is that Krishna will receive a disability benefit of $660 under the CPP.

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Krishna is 56 years old; he has contributed to the CPP without interruption for over 30 years. While crossing the street, Krishna was struck by a bus and seriously injured. He is currently hospitalized and on life support and his doctors have informed Krishna's family that it is uncertain as to whether he will awaken from his coma. Assuming at the time of his accident, Krishna was entitled to a CPP retirement benefit of $660, the flat-rate disability amount is $496.36 per month and the maximum monthly disability benefit is $1362.30, how much of a disability benefit will Krishna receive under the CPP? a) $660 b) $865.94 C) $991.36 d) $1156.36

a company's records showed the following for the month of december: sales $9,000; sales returns and allowances $1,000; cost of goods sold $5,000. net sales equal:

Answers

The total of a company's net sales is its gross sales less any returns, allowances, and discounts.

What is the formula for net sales?The total income that your company brings in before discounts, returns, and allowances is referred to as gross sales value. The following is the net sales formula.

Net sales = Gross sales – Returns – Allowances – Discounts.

Sales made with a debit card, cash, credit card, or trade credit will all be counted toward the total sales. The total number of units sold is multiplied by the price per unit for the purpose of calculating gross sales.Example to illustrate net sales

The net sales will be computed with the formula net sales = gross sales – returns – allowances – discounts. The net sales would be $9000 -  $1000 - $5000 = $3000.

Gross Sales = $9,000

Returns and Allowances = $1000

Discounts =$5000

Net Sales = $3000.

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Which of the following statements below lists the rules of entering transactions into the accounting equation?

Answers

Answer:

where is the stuff its just the question

Explanation:

The assets should always match the total of the equity and liabilities, and the accounting equation needs to be in balance. Thus, option D is correct.

What are transactions?

A transaction can be defined as the process where money, product, services, or anything is being transferred from one person to another person.

Selling, buying, receivables, and reimbursements are major categories of monetary operations that have an effect on the firm business and its balance sheet

According to the accounting rules and regulations, it is said that there are two columns that are the assets and the liabilities and every transaction has at least two effects. Also if in the end, the asset, and liabilities side does not match then reconciliation needs to be made. Therefore, option D is the correct option.

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The question is incomplete, The option will be:

a. The accounting equation can be out of balance only when payment will be received at a future date.

b. An asset account and a liability account are always affected.

c. Transactions entered into the accounting equation must involve cash and an equity account.

d. The accounting equation must always remain in balance so that assets always equal the sum of liabilities and equity.

What five elements should you include in your business writing to make it more effective?

Answers

Focus, development, unity, coherence, and correctness are five characteristics of strong business writing that are briefly described below. For scholarly and expository writing, the characteristics discussed here are particularly crucial.

What does formal writing entail?

A type of writing utilised in a professional setting is called business writing. It is a well-written work with a defined purpose that effectively, succinctly, and provides pertinent information to the reader. It consists of proposals for clients, reports, memos, emails, and notices. Policy suggestions, ads, press releases, application letters, emails, and memoranda are just a few examples of the types of professional communication that go under the heading of "business writing."

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Recording, classifying, and summarizing economic events in a logical manner for the purpose of providing financial information for decision making is commonly called Group of answer choices auditing. economics. finance. accounting.

Answers

Recording, classifying, and summarizing economic events in a logical manner for the purpose of providing financial information for decision making is commonly called accounting.

Accounting is a fundamental process in business and financial management. It involves systematically recording financial transactions, classifying them into appropriate categories, and summarizing the information to create financial statements such as the income statement, balance sheet, and cash flow statement. These financial statements provide a snapshot of a company's financial performance, position, and cash flows, enabling decision-makers to analyze and make informed decisions about the organization's operations, investments, and financial strategies.

While auditing, economics, and finance are related disciplines, each has its own distinct focus. Auditing involves examining and evaluating financial records and statements to ensure accuracy, compliance, and reliability. Economics studies the production, distribution, and consumption of goods and services within an economy. Finance, on the other hand, focuses on managing financial resources, investments, and the financial aspects of decision making. However, accounting serves as the foundation for providing the necessary financial information in these areas.

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100 free hope you do the same

Answers

Tyyyyyyyyysssssmmmmmmmm

Answer:

Explanation:

ma boy

Emergency funds are calculated based on: A.) Retirement Planning B.) Monthly Expenses C.) Monthly Income D.) Investing for College

Answers

Answer:

B

Explanation:

Answer:

B

Explanation:

which of the following statements best captures the core economic concept of "incentives"? a. "If you don't clean your room, you can't go out to the movies on friday night." b. if you buy a new computer with your savings, you will not be able to buy a new phone." c. sure, i'll give you my cookie in excange for your soda." d. " i am trying to decide if i want another slice of pizza."

Answers

Which best captures the core economic concept of "incentives"? a. "I can't go to the movies on Friday night unless I clean my room." Economic incentives are monetary rewards given to people for changing patterns of consumption and production in the economy.

The primary purpose of economic incentives is to influence human behavior in ways that naturally produce desired outcomes. It is some kind of financial incentive provided by governments and corporations. There are three main factors that motivate consumers to purchase products. Price, quality and brand image. If companies want to encourage consumers to buy their products, they have to lower their prices. This is a monetary incentive.

reward incentives. Compensation incentives typically cover some of the more basic incentive options.

recognition incentives.

Reward incentives. thanks incentive.

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A surplus of computers is supplied. What does this indicate about the demand of the computers? How would the price change affect the computer company’s supply and demand equilibrium?

Answers

If a surplus of computers are supplied, then there is more supply than demand for computers. If the price of the computers changed, the demand would change accordingly (whether the price increased or decreased) and a new equilibrium would be reached at the new price.

A surplus in the supply of computers indicate that the demand for computers is less than the supply of computers.

The price change would lead to an increase in the equilibrium quantity of computer demanded and supplied.

A surplus in supply means that the quantity supplied of a good exceeds the demand for the good.  It means that the demand for the good is less than the supply of the good. When the supply of a good increases, the equilibrium price of the good decreases and the equilibrium quantity of the good increases. On a demand and supply curve, a surplus would be shown as a rightward shift of the supply curve.

As a result of the decline in price, the quantity demanded of computers would increase. This would lead to a rise in equilibrium price and quantity.

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A surplus of computers is supplied. What does this indicate about the demand of the computers? How would

A perfectly competitive firm not able to sell all it wants at the market equilibrium
price. Therefore, it has no incentive to increase prices (sacrificing revenues and
therefore profits) to increase sales. Because other firms are selling nearly identic
products (i.e., goods are homogeneous) at the market equilibrium price, trying to
raise the price would lead to the firm gaining all its sales.

Answers

A perfectly competitive firm is not able to sell all it wants at the market equilibrium price. Therefore, it has no incentive to increase prices (sacrificing revenues and therefore profits) to increase sales. Because other firms are selling nearly identic products (i.e., goods are homogeneous) at the market equilibrium price, trying to raise the price would lead to the firm gaining all its sales.TRUE

In economic theory, perfect competition occurs when all companies sell identical products, market share does not influence price, companies are able to enter or exit without barriers, buyers have perfect or full information, and companies cannot determine prices.In economics, specifically general equilibrium theory, a perfect market, also known as an atomistic market, is defined by several idealizing conditions, collectively called perfect competition, or atomistic competition.

Perfect competition is an economic term that refers to a theoretical market structure in which all suppliers are equal and overall supply and demand are in equilibrium. For example, if there are several firms producing a commodity and no individual firm has a competitive advantage, there is perfect competition.The three primary characteristics of perfect competition are (1) no company holds a substantial market share, (2) the industry output is standardized, and (3) there is freedom of entry and exit. Efficient market equilibrium under perfect competition is when marginal revenue equals marginal cost.

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Last year a business had fixed costs of £875,000 and revenue of 2.5 million. The business had total variable coats of 50,000 and sold 100,000 units. Calculate the total costs of the business last year

Answers

Answer:

Total cost of the business = £925,000

Explanation:

Solution:

Data given:

Fixed cost = £875000

Revenue generated = 2.5 million

Total variable cost = 50,000

Units Sold = 100,000

What is the total cost of the business = ?

Formula for total cost of the business is:

Total Cost = Total Fixed Cost + (Average variable cost per unit x units produced)

Here we have, Total variable cost not the average variable cost per unit.

So,

Average variable cost per unit = Total variable cost/ units produced

Average variable cost per unit = 50,000/100,000

Average variable cost per unit = 1/2 = £0.5 per unit.

Now,

Total cost of the business = Total Fixed Cost + (Average variable cost per unit x units produced)

Let's plug in the values.

Total cost of the business = 875,000 + (0.5 x 100,000)

Total cost of the business = £925,000

What does the phrase "like animals escaped from their caves" imply about the sun's impact on the children?

Answers

the sun being out causes children to come outside and “escape from their homes” to enjoy the sun. without the sun (rain or cloudy weather), children will most likely stay inside

Write any four differemces between administrative manpower and technical manpower​

Answers

Manpower planning is likewise called human assets making plans, and it's miles the manner that control uses to determine the way wherein an organization needs to circulate from factor A to point B, in terms of manpower. This happens through planning and development and allows management to have the proper sorts of employees in the right quantity in the right place at the right time. together, having the proper manpower will assist the company to reap its dreams, and also will gain character personnel in the first-class manner possible. This form of planning allows HR departments to forecast which human sources are required to carry out which jobs. The HR branch will also investigate which skills are required of employees for each task. It is reasonably complicated and, if finished effectively, this may useful resource for HR in estimating its destiny function in phrases of call for and supply. essentially, this gives the HR department a snapshot of its destiny and enables the department to plan ahead for what is to come.

Manpower groups act as human aid managers for one-of-a-kind corporations by using imparting them with placement offerings. but, the primary goal of these corporations is to assist people who are in search of employment to get placed in the correct corporations with suitable job profiles.

Manpower is a staffing company. frequently known as a “temp provider," the employer's number one business is supplying a bridge between certified people and the businesses that require its services.

Manpower Recruitment or deliver agency” means any man or woman engaged in imparting any. service, directly or circuitously, in any way for recruitment or supply of manpower, briefly or. otherwise, [to any other person];] [Section 65(68) of Finance Act, 1994 as amended]Jul 7, 1997.

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in preparing consolidated financial statements, the gross profit or loss recorded by individual affiliates for intra-entity asset transfers is multiple select question. included in inventory in the consolidated balance sheet. excluded from net income. included as part of net income. excluded from inventory in the consolidated balance sheet.

Answers

In preparing consolidated financial statements, the gross profit or loss recorded by individual affiliates for intra entity asset transfers is excluded from net income and excluded from inventory in the consolidated balance sheet.

Consolidated financial statements refers to the financial statements of an organizations which includes all the records related to assets, liabilities, equity, income and other cash flows of the parent company as well as its subsidiaries. Consolidated statements must always eliminate all the transactions made between the parent company and its subsidiary and transactions made with the outside entities must be included in the financial statements. It is, however, very important for the companies to record all the selling and buying transactions made so that the revenues earned can be measured and effective use of such accounts can be done.

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Suppose that research finds a link between high fructose corn syrup (HFCS) and obesity, which then leads American consumers to switch from HFCS products to pure cane sugar products. The graphs show the markets for cane sugar in Haiti and the United States before the studies were divulged. Shift the curves in the graphs, including the horizontal world price curve, to describe the new trade equilibrium that results after the switch in preferences of American households, and then answer the follow‑up question.

Assume that the United States and Haiti are the only non‑HFCS sugar trading parties in the world and that there are no quotas, subsidies, or tariffs distorting these markets.

Answers

The new equilibrium from the information shows that sugar cane producers in Haiti benefited.

What is equilibrium?

It should be noted that equilibrium simply means balance that is when the supply of goods and demand are equal.

In this case, in the situation of free trade, the world price line is a horizontal lines. The fact that the consumers in the United States demanded more sugar cane product means that the sugar cane producers in Haiti benefited.

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Answer:

On the US graph the domestic demand shifts right to show the increased demand for cane sugar. The world price also increases one notch, which applies to both graphs. No other changes are made to the graphs.

The cane sugar producers in Haiti benefit.

Explanation:

As American consumers move their consumption away from products sweetened with HFCS towards those with cane sugar, domestic demand for cane sugar in the United States shifts to the right.

To have an equilibrium with trade, imports must equal exports. Therefore, the international price of sugar moves up until the excess demand (shortage) of sugar in the United States equals the excess supply (surplus) in Haiti. Since only the price of the good has changed, there are movements along the supply curves and Haiti's domestic demand curve, but these curves themselves do not shift. The surplus of 6000 pounds of sugar that Haiti exports is equal to the shortage of 6000 pounds of sugar that the United States imports.

To determine who is better‑off because of the increase in U.S. demand, consider whether or not the higher price is good for the individuals in each country.

Producers are better‑off, since the higher price of sugar increases their producer surplus. This is true for both producers in the United States and those in Haiti.

Consumers in Haiti face a higher price of sugar, so their consumer surplus decreases, meaning that consumers in Haiti are worse off because of the price increase.

Which of the following is NOT one of the credit reporting agencies?

Answers

Answer:

we need the opitions lol

Explanation:

Bank deposits are insured up to a certain amount by the

A) bank itself
B) Internal Revenue Service
C) Federal Deposit Insurance Corporation
D) Bank Deposit Insurance Commission

Answers

C should be correct, have a good night

What is normative economics concerned with? ​

Answers

Answer: Normative economics is concerned with value judgements.

Explanation:  It deals with the study of and presentation of policy prescriptions about economics. Normative statements are statements which cannot be supported or refuted by evidence. Ultimately, they are opinions about how economics and markets should work.

Answer:

Normative economics focuses on the value of economic fairness, or what the economy "should be" or "ought to be." While positive economics is based on fact and cannot be approved or disapproved, normative economics is based on value judgments.

Explanation:

Suppose that the net primary productivity of a particular ecosystem is 80 units per year. The respiration rate of primary producers is 30 units per year, and the respiration rate of herbivores is 10 units per year. The gross primary productivity is _______ units per year.

Answers

The gross primary productivity of the ecosystem is 110 units per year.

The gross primary productivity can be calculated by adding the respiration rate of primary producers to the net primary productivity, which is:
Gross primary productivity = net primary productivity + respiration rate of primary producers
Substituting the given values, we get:
Gross primary productivity = 80 units per year + 30 units per year
Gross primary productivity = 110 units per year
Therefore, this represents the total amount of organic matter that is produced by the primary producers through photosynthesis, before any of it is consumed by herbivores or lost to the environment through respiration or decomposition.

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Manual transmissions are being discussed. Technician A says that if it requires gear oil, to always use GL-5 rated oil to protect the synchronizers. Technician B says that if it requires engine oil that you should add a friction modifier to it. Who is correct? A. Technician A B. Technician B C. Both Technician A and B D. Neither Technician A or B

Answers

Answer:

The correct Technician is;

Technician B

Explanation:

API GL-5 gear oils does not meet transmission oil specifications as an API GL-5 oil can produce up to 400% the amount of copper observed when used oil is carried out than GL=4 gear pols, such that the synchronizers in transmission having synchromesh are made ineffective due to wear

Friction modifiers changes the amount of friction between transmission components and engine components.

When friction modifier are added to engine oil used in manual transmission,  it reduces the friction by modifying the friction coefficient of surfaces in contact and moving in relation to each other such that wear is reduced

Modern manual transmission engines require more protection than the manual transmission of older car engines which includes the presence of friction modifiers

Therefore, only Technician B is correct.

What is Gravitational law and how yo solve it​

Answers

Explanation:

I believe this is what you are asking for, Newton's law of gravitation.

The law of Newton's universal-gravitation states that every particle will attract every other particle in the universe. The force that attracts this is a force that is directly proportional to a product of the mass.

Which wizard is a tool provided by Access that is used to scan the table's structure for duplicate data?
O Query Design Wizard
O Table Design Wizard
O Table Analyzer Wizard
0 Performance Analyzer Wizard

Answers

Answer:

Table Analyzer Wizard

Explanation:

Answer:

Table Analyzer Wizard

Explanation:

right on the test

Define market structure

Answers

Answer:

Market Structure in economics, depicts how firms are differentiated and categorised based on types of goods they sell and how their operations are affected by external factors and elements. Market structure makes it easier to understand the characteristics of diverse markets.

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