New answers tagged

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Almost all bonds have a "minimum amount" and "minimum increment", in the thousands of dollars, which is a lot if you're a retail investor working with thousand-dollar notionals, but is effectively zero if you're an institutional investor working with million-dollar notionals. As I recall, U.S. treasury is now USD 100 minimum, most ...


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My lecturer said that if a project has IRR 12%, and the cost of capital is 10%, then you will generate positive NPV. Let's take a concrete example: Project Borrow (at 10%) Invest (at 12%) Net cashflow Period 0 + $100 (inflow) - $100 (outflow) $0 Period 1 - $110 (outflow) + $112 (inflow) + $2 The net cashflow of $2 at period 1 can be ...


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you can also solve this by using the PMT function and goalseek in excel. The answer is as follows: What I did is, I first set the interest rate to 0% and calculated the monthly payment using the PMT function. Then I goalseeked the monthly interest rate such that the monthly payment would be 300.


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If you have $50 000 today and you invest it for 10 years and earn 6% interest annually and your investment is growing year by year then the correct answer would be as follows:


2

I think the confusion arises from the definition of break-even point. Given a set of cash flows the IRR is the rate such that negative and positive cash flows balance out. If you were to use this rate for discounting, the NPV would be $0$. However, there is no reason to use the IRR for discounting. It's just a number. A firm should use its cost of capital ...


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I interpret the question differently: $50,000k being the recurring and increasing cash flow itself, not initial capital.


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Unfortunately I do not agree with the answer provided by FutForFut. In my opinion answer of 60 491,63$ can be correct under certain circumstances. There is also another correct answer, but I cannot agree with answer of 81 474,88$. More specifically. Problem was “I am paid $50,000 now, growing at 6% per year for a total of 10 years, but the discount rate is 4%...


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Just look at meeting date OIS. There should be broker screens and dealer runs for these for liquid markets.


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Two important things to check Are larger loans going to borrowers with lower risk scores, all else being equal? I would do a multivariate analysis including both loan amount and borrower risk ratings (and term if you have it). It may be that higher loan amounts are going to the lower risk clients. Are the loan terms otherwise the same across loan amounts? ...


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I don't have enough reputation to write this as a comment, but, in my opinion, looking only at the rate-size relationship is not sufficient as you leave out one really important feature of credit: maturity In most cases, the longer the maturity of the loan, the higher the compensation asked by the lenders. For example look at yield curves in credit markets. ...


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