During the last year you have had a loan commitment from your bank to fund working capital for your business. The total line available was $10,000,000, of which you took down $7,800,000. It is now the end of the loan commitment period and your bank had you pay the back-end fees. You have misplaced the paperwork that listed the terms of the commitment, but you know you paid total fees (this does not include any interest paid to borrow the $7,800,000) of $51,200 on this loan commitment. You remember that the back-end fee was 112 basis points. Calculate the front-end fee on this loan commitment.
A. 31 basis points
B. 25 basis points
C. 23 basis points
D. 27 basis points
Answer: D
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A) net contribution B) forward-looking C) backward-looking D) marketing ROI E) marketing ROS
Answer the following statements true (T) or false (F)
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Answer the following statement true (T) or false (F)
Zinc Corp is planning to purchase new machinery. The initial cash outlay is expected to be $40,000 and the required return on investment is 9%. The cash flows for the next 3 years are $9,800, $11,720 and $9,640. Based on net present value (NPV) analysis, Zinc Corp should:
A. accept the project as the NPV is $14,500. B. reject the project as the NPV is $(13,700.84). C. accept the project as the NPV is (28,900.25). D. reject the project as the NPV is 40,500. E. accept the project as the NPV is $56,225.