Problems

These problems are available in MyFinanceLab.

  1. Different loan rates. Winthrop Enterprises is a holding company (a firm that owns all or most of some other companies’ outstanding stock). Winthrop has four subsidiaries. Each subsidiary borrows capital from the parent company for projects. Ervin Company is successful with its projects 85% of the time, Morten Company 92% of the time, Richmond Company 78% of the time, and Garfield Company 83% of the time. What loan rates should Winthrop Enterprises charge each subsidiary for loans?

  2. Different loan rates. Keith Peterson is the CFO of Springfield Soups and Sauces. The company’s typical success rate for new products is 88%. Keith wants to improve this success rate to 94%. What loan improvement ...

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