1. Your company plans to borrow $4 million for 12 months, and your banker gives you a stated rate of 12 percent interest. You would like to know the effective rate of interest for the following types of loans. (Each of the following parts stands alone.) a. b. C. Simple 12 percent interest with a 10 percent compensating balance. Discounted interest. Discounted interest with a 5 percent compensating balance.
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- Finding the Interest Rate: Concept Connection Example 6-3 (page 237) 18. What interest rates are implied by the following lending arrangements? a. You borrow $500 and repay $555 in one year. b. You lend $1,850 and are repaid $2,078.66 in two years. c. You lend $750 and are repaid $1,114.46 in five years with quarterly compounding. d. You borrow $12,500 and repay $21,364.24 in three years under monthly compounding. (Note. In parts c and d, be sure to give your answer as the annual nominal rate.) Lasher, William R.. Practical Financial Management (Page 276). South-Western College Pub. Kindle Edition.4) You borrow $2500 on September 3rd this year. Your demand loan carries an interest rate of 7.46%. You make partial payments of $500 on October 15th and $1575 on November 17th, You want to make a final payment of the remaining outstanding balance on November 30tn. What is the size of your final payment? Use the declining balance method. A) $450.02 B) $399.76 C) $612.84 D) $851.11 E) $449Consider a borrower who took a loan worth 10000 at the beginning of period 1. The loan is to be repaid over 20 periods. Furthermore, assume that the interest rate is equal to 5%. How much does the borrower owe in debt at the beginning of period 3? Don't use Excel
- A finance company uses the discount method of calculating interestThe loan principal is $4,500, the interest rate is 4.5%, and repayment is expected in one and half yearsYou will receive Type your answer here from the lender .Your company plans to borrow $5 million for 12 months, and your banker gives you a stated rate of 14 percent interest. Calculate the effective rate of interest for the following types of loans. a. Simple 14 percent interest with a compensating balance of 10 percent. (Use a 360-day year. Input your answer as a percent rounded to 2 decimal places.) b. Discounted interest (with no compensating balance). (Input your answer as percent rounded to 2 decimal places.) c. An installment loan (12 payments). (Input your answer as a percent rounded to 2 decimal places.) d. Discounted interest with a compensating balance of 5 percent. (Use a 360-day year. Input your answer as a percent rounded to 2 decimal places.)4. What is the purpose of a bridge loan? 5. Distinguish between bank discount and simple interest.6. Differentiate between a stated rate of interest and an effective rate of interest. 7. What is the significance of finding the internal rate of return (IRR)? 8. Jill Kramer borrowed $25,000 to pay for a startup business. Jill must repay the loan at the end of five months in one payment with a 6 percent simple interest rate.What is the total amount that Jill must repay in five months?How much interest does Jill repay?9. Joe Jones went to his bank to find out how long it will take for $1,000 to amount to $1,350 at 9 percent simple interest. Solve Joe's problem.
- The following loan was paid in full before its due date. a) Find the value of h using an appropriate formula. b) Use the actuarial method to find the amount of unearned interest. c) Find the payoff amount. Regular Monthly Payment APR # of Payments Remaining after Payoff 8.7% 4 $214 What is the finance charge per $100 financed? h = $ (Round to the nearest cent.) The unearned interest is about $ (Round to the nearest cent.) The payoff amount is $ Enter your answer in each of the answer boxes. f12 inser f9 f1o f7 fg f6 f4 f5 esc 5 7 8. %24 3 %23Suppose that you took out a loan at 12% interest for 200 days. If the amount of interest was $710.14, use the exact interest method to find the amount of principal you. borrowed. (Round to the nearest whole dollar amount.) O $47 O $4,669 O $10,656 O $10,800Find the interest rates earned on each of the following: A. You borrow $700 and promise to pay back $749 at the end of 1 year B. You lend $700 and the borrower promises to pay you back $749 at the end of 1 year C. You borrow $85,000 and promise to pay back $201,229 at the end of 10 years D. You borrow $9,000 and promise to make payments of $2,684.80 at the end of each year for 5 years
- A bank is offering a loan of $20,000 with an interest rate of 9%, payable with monthly payments over a 4-year period. a. Calculate the monthly payment required to repay the loan. b. This bank also charges a loan fee of 4% of the amount of the loan, payable at the time of the closing of the loan (that is, at the time the borrower receives the money). What effective interest rate is the bank charging?1. Write the Formula for the equation for the payment on the Loans (you do NOT need to evaluate) (a) 30 year house loan where you borrow $125,000 at 4.2% interest with monthly payments. (b) 20 year house loan where you borrow $125,000 at 4.2% interest with monthly payments (c) A company borrows $12,000,000 at 2.8% with quarter payments over 10 years. (d) You buy a new car at $15,000 that you make a $1,500 down payment. You finance the rest at 3.6% interest with monthly payments over 4 years.You are looking at a one-year loan of $18,000. The interest rate is quoted as 7.4 percent plus two points. A point on a loan is 1 percent (one percentage point) of the loan amount. Quotes similar to this one are common with home mortgages. The interest rate quotation in this example requires the borrower to pay two points to the lender up front and repay the loan later with 7.4 percent interest. a. What rate would you actually be paying here? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the EAR for a one-year loan with a quoted interest rate of 10.4 percent plus two points? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Interest rate b. EAR 9.41 % 10.61 % Is your answer affected by the loan amount? No Yes