Course Project 1 - 1131 Words

Course Project-Part 1 Hannah Satterthwaite Professor Gatto DeVry University Finding the Best Loan Options 1. Assuming that AirJet Parts, Inc. is considering loans from National First and Regions Best, what are the EARs for these two banks? National First- (1+.0675/2) ²-1 = .078890625 Regions Best- (1+.1317/12) ¹Ã‚ ²-1= .1399478787 Using the Estimated Annual Rate formula, I found that National First estimated annual rate was 7.9% and Regions Best was 13.995% 2. Based on your calculations above, which of the two banks would you recommend and why? Explain your rationale. I would recommend AirJet Parts, Inc. to go with National bank since the interest rate is significantly lower. When you borrow loans, you want to get the†¦show more content†¦Bond Evaluation 1. What coupon rate should AirJet Best Parts set on its new bonds to sell them at par value? Bond value=coupon x [1-1/(1+r)T/r+1,000(1+r)T] Annual coupon= 7.50% Face Value= $1000 (usual par price for corporate bonds) Price of Bond= $1,062 Years= 20 Annual interest= .075 x 1,000 = $75 Semiannual interest = 75/2 = $37.50 $1062= 37.5x [1-1/(1+YTM)40/YTM+1,000(1+YTM)40] 6.92% 2. What is the difference between the coupon rate and the YTM of bonds? The coupon rate is the annual coupon divided by the face value of a bond. This differs from YTM because this shows us the percent rate that the coupon will have. It also is a more fixed rate, unlike the YTM, which increases the bond’s value. The Yield to Maturity Rate is the rate required on a bond. This helps to determine the value of a bond at a particular point in time. 3. What factors will contribute to the riskiness of these bonds? Explain in detail your rationale. The first kind of risk that could affect the bonds is credit risk. There is a chance that the bond could be defaulted, which means that the yield rate will decrease. The other kind of risk factor the company could come across is interest rate risk. Because interest can either increase or decrease there is a probability that AirJet Best Part’s bonds could lose its value over time, depending on how long they have the bond. The longerShow MoreRelatedCourse Project 11173 Words   |  5 PagesCourse Project – Part I  © The content of this document is the property of Wendell W. Bragg and DeVry University. No portion of this document may be reproduced in any manner except as a homework assignment submission. Duplication, reproduction or display either physically or electronically for any other purpose without the author’s written consent is prohibited. Introduction The Course Project is an opportunity for you to apply concepts learned to a real-life simulation experience. ThroughoutRead MoreCourse Project 1718 Words   |  3 PagesBus 379 Course Project March 31, 2013 Task 1 1. 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It is completed in two parts. The second, Course Project 2, is an opportunity to show the ability to analyze financial statements to arrive at conclusions based upon the analysis. Course Project 1 - OverviewRead MoreEssay on Socs 350 Entire Course Week 1 - 81370 Words   |  6 PagesSOCS 350 Entire Course Week 1 - 8 Purchase here http://chosecourses.com/SOCS%20350/socs-350-entire-course-week-1-8 Product Description (SOCS 350 Cultural Diversity in the Professions - DeVry) SOCS 350 Week 1 Assignment Paper: Let’s Be Lefties for a Day SOCS 350 Week 1 Discussion 1 You Eat What?! SOCS 350 Week 1 Discussion 2 Some of My Best SOCS 350 Week 2 Course Project: Project Proposal SOCS 350 Week 2 Quiz (11 Questions Answers) SOCS 350 Week 2 Discussion 1 Culture is in