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The treasurer

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Question

16)The treasurer for Pittsburgh Iron Works wishes to use financial futures to hedge her interest rate

exposure. She will sell five Treasury futures contracts at $137,000 per contract. It is July and the contracts must be closed out in December of this year. Long-term interest rates are currently 10.30 percent. If they increase to 12.50 percent, assume the value of the contracts will go down by 10 percent. Also if interest rates do increase by 2.2 percent, assume the firm will have additional interest expense on its business loans and other commitments of $73,000. This expense, of course, will be separate from the futures contracts.

a.What will be the profit or loss on the futures contract if interest rates go to 12.50 percent by December when the contract is closed out? (Input the amount as a positive value.)
  (Click to select)ProfitLoss on futures contracts$  
b-1.After considering the hedging, what is the net cost to the firm of the increased interest expense of $73,000?
  Net cost$  
b-2.What percent of this $73,000 cost did the treasurer effectively hedge away? (Input your answer as a percent rounded to 2 decimal places.)
  Percentage hedged away%  
c.Indicate whether there would be a profit or loss on the futures contracts if interest rates went down.
  
 LossProfit
 
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Charmin Paper Company

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Question

15) Charmin Paper Company sells to the 12 accounts listed next.   AccountReceivable
Balance OutstandingAverage Age of
the Account
Over the Last YearA$68,000  24 B 150,000  44 C 72,500  17 D 23,200  60 E 50,600  42 F 272,000  39 G 30,200  23 H 342,000  71 I 42,200  38 J 90,200  53 K 302,000  19 L 60,500  35   
    Capital Financial Corporation will lend 90 percent against account balances that have averaged 30 days or less; 80 percent for account balances between 31 and 40 days; and 70 percent for account balances between 41 and 45 days. Customers that take over 45 days to pay their bills are not considered acceptable accounts for a loan.  
    The current prime rate is 14.50 percent, and Capital charges 4.50 percent over prime to Charmin as its annual loan rate.  
a.Determine the maximum loan for which Charmin Paper Company could qualify.  
  Maximum loan amount$    
b.Determine how much one month’s interest expense would be on the loan balance determined in part a. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)         Interest expense$  

 
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Summit Record Company

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Question

14)Summit Record Company is negotiating with two banks for a $168,000 loan. Fidelity Bank requires a

compensating balance of 18 percent, discounts the loan, and wants to be paid back in four quarterly payments. Southwest Bank requires a compensating balance of 9 percent, does not discount the loan, but wants to be paid back in 12 monthly installments. The stated rate for both banks is 11 percent. Compensating balances will be subtracted from the $168,000 in determining the available funds in part a.

a-1.Calculate the effective interest rate for Fidelity Bank and Southwest Bank. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.)
 
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Business Model Generation

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Question

In the last 2 chapters of Business Model Generation, the authors describe and analyze the strategy and process for

developing successful business models. After carefully reading and understanding these chapters, answer these research questions:

  • RQ1 What role should external factors of demand play in successful business models? NOTE: First, fully define the role and then analyze or discuss. This must be at least 4 paragraphs.
  • RQ2 What is “Business Model Design and Innovation”? Provide examples and discussion for each factor listed. This must be at least 3 paragraphs.
  • RQ3 What are the challenges to “Business Model Design and Innovation”? This must be at least 3 paragraphs.

Deliverables:

This assignment must be in a business professional format with a cover page in current APA format and must contain at least 600–800 words. This assignment must also include current APA in text citations and scholarly references.

 
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