Exam (elaborations)
FIN3702 Assignment 1 (COMPLETE ANSWERS) Semester 2 2024 (355803)- DUE 6 September 2024 1 review
FIN3702 Assignment 1 (COMPLETE ANSWERS) Semester 2 2024 (355803)- DUE 6 September 2024 1 review
[Show more]
Connected book
Book Title:
Author(s):
- Edition:
- ISBN:
- Edition:
Content preview
,FIN3702 Assignment 1 (COMPLETE ANSWERS)Semester 2 2024 (355803)- DUE 6 September 2024
; 100% TRUSTED Complete, trusted solutions and
explanations.
Question 1 Not yet answered Marked out of 1.00 Question 2
Not yet answered Marked out of 1.00 QUIZ Which of the
following is appropriate collateral for a loan secured under a fl
oating inventory lien? 1. Cars 2. Paper clips 3. Drill presses 4.
File cabinets A fi rm has issued R2 million worth of commercial
paper that has a 90-day maturity and sells for R1 950 000. The
approximateannual interest rate on the issue of commercial
paper is … (assume 365 days in a year). 1. 5% 2. 11% 3. 21% 4.
23%
Appropriate Collateral for a Loan Secured Under a Floating
Inventory Lien
A floating inventory lien allows a borrower to use inventory as
collateral, but the lender's claim on the inventory is not fixed;
it "floats" with the changes in the inventory. The collateral
should be something that can be easily inventoried and used
in the firm’s operations.
Among the given options:
Cars: These are fixed assets, not inventory.
Paper clips: These are low-value, consumable inventory
items.
, Drill presses: These are equipment or machinery, not
typically considered inventory.
File cabinets: These are fixed assets, not inventory.
The most appropriate collateral under a floating inventory lien
would be something like paper clips, as they represent
inventory rather than fixed assets.
Answer: 2. Paper clips
Approximate Annual Interest Rate on the Issue of
Commercial Paper
To find the approximate annual interest rate, we first calculate
the discount and then annualize it.
Face value: R2,000,000
Selling price: R1,950,000
Discount amount: R2,000,000 - R1,950,000 = R50,000
Discount rate: R50,000 / R2,000,000 = 0.025 or 2.5% (for
90 days)
To annualize this rate, multiply by the number of periods in a
year (365/90):
Annualized discount rate: 2.5% × (365/90) ≈ 10.2%
Hence, the approximate annual interest rate is closest to 11%.
Answer: 2. 11%
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through EFT, credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying this summary from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Novaace1. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy this summary for R46,51. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
62890 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy summaries for 14 years now