6. An investor lends $5000 and receives a promissory note promising repayment of the loan in 90 days with 8.5% simple interest. This note is immediately sold to a bank that charges 8% simple interest. How much does the bank pay for the note? What is the investor's profit? What is the bank's profit on this investment when the note matures?

6. An investor lends $5000 and receives a promissory note promising repayment of the loan in 90 days with 8.5% simple interest. This note is immediately sold to a bank that charges 8% simple interest. How much does the bank pay for the note? What is the investor's profit? What is the bank's profit on this investment when the note matures?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

A bank is offering a special deal. If you invest X now, the bank will give you 15,000 at time 7; 14,000 at time 8; 13,000 at time 9; and so on with the last payment being at time 14. Using an annual effective interest rate of 8%, determine X.
Suppose that you want to take out a loan and that your local bank wants to charge you an annual real interest rate equal to 3%. Assuming that the annualized expected rate of inflation over the life of the loan is 1%, determine the nominal interest rate that the bank will charge you. What was the actual real interest rate on the loan if, over the life of the loan, actual inflation is 0.5%?
A bank wishes to earn a 17% simple interest in discounting notes. If the term of the discount is 3 years and 9 months, what simple discount rate should be used?
1. A lender is offering you a $300,000 30Y FRM at 7.2%. What is your monthly payment over the life of the loan? $2,036.36 2. You decide to originate the loan, but move at the end of 5 years. What is the remaining balance you owe the bank given the due-on-sale clause? Number 2 please
What lump sum of money must be deposited into a bank account at the present time so that $500 per month can be withdrawn for five years, with the first withdrawal scheduled for six years from today? The interest rate is 0.75% per month.
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) $449
Suppose you deposit $1,181.00 into an account 5.00 years from today. Exactly 18.00 years from today the account is worth $1,800.00. What was the account's interest rate?
You put 8,293 in the bank for 11 years at 5% what factor would you use to calcuate the future value of your deposit?
8) A bank client has a debt of 12,425 pesos including interest to be paid in 12 months. The debtor receives unexpected sales flows and decides to advance the payment of his debt at this time for 6,649 pesos and negotiates to pay the rest in two years. What is the payment you will have to make to pay off your debt within 48 months? The conditions of the negotiation are: simple annual interest rate of 12.34% and that the focal date of 48 months is considered for resolution. options: 6603.78 7093.78 6595.78 7131.78
1. A bank offers 1.5% annual simple interest rate for a particular deposit. How much interest will be earned if 1 million pesos is deposited in this savings account for 1 year?2. When invested at an annual interest rate of 7%, the amount earned ₱11,200.00 of simple interest in 2.5 years. How much money was originally invested?3. Joseph borrows ₱50,000.00 and promise to pay the principal and interest at 12% compounded monthly. How much must he repay after 6 years?4. A loan ₱125,000.00 at 8% compounded quarterly was paid back with an amount of ₱176,000.00 at the end of the period. For how long was the money borrowed?5. How much must be invested today in a savings account in order to have ₱50,800.00 in 6 years and 9 months if money earns 5.4% compounded semi-annually?
You plan to deposit $700 in a bank account now and $900 at the end of one year. If the account earns 2% interest per year, what will the balance be in the account right after you make the second deposit? There will be $ in the account right after the second deposit. (Type an integer or a decimal.)
Solve the problem below. 2. Suppose that your bank has a minimum loan charge of $48 when you borrow at 6% ordinary interest for 90 days. What principal borrowed will result in a $48 interest charge?

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