Cost of Bank LoansDel Hawley, owner of Hawley's Hardware, is negotiating with First City Bank for a 1-year loanof $93,000. First City has offered Hawley the alternatives listed below. Calculate the effectiveannual interest rate for each alternative. Do not round intermediate calculations. Round youranswers to two decimal places.a. A 11% annual rate on a simple interest loan, with no compensating balance required andinterest due at the end of the year.11b. A 8% annual rate on a simple interest loan, with a 20% compensating balance requiredand interest due at the end of the year.10c. A 8.5% annual rate on a discounted loan, with a 15% compensating balance.*8.57%X%d. Interest figured as 7% of the $93,000 amount, payable at the end of the year, but with theloan amount repayable in monthly installments during the year.Alternative B #%%Which alternative has the lowest effective annual interest rate?

Effective annual rate (EAR) or annual percentage yield (APY) refers to the rate of interest that is…

Del Hawley, owner of Hawley's Hardware, is negotiating with First City Bank for a 1-year of $93,000. First City has offered Hawley the alternatives listed below. Calculate the effec annual interest rate for each alternative. Do not round intermediate calculations. Round y answers to two decimal places. .A 11% annual rate on a simple interest loan, with no compensating balance required a interest due at the end of the year. 11 % D. A 8% annual rate on a simple interest loan, with a 20% compensating balance require and interest due at the end of the year.

Del Hawley, owner of Hawley's Hardware, is negotiating with First City Bank for a 1-year of $93,000. First City has offered Hawley the alternatives listed below. Calculate the effec annual interest rate for each alternative. Do not round intermediate calculations. Round y answers to two decimal places. .A 11% annual rate on a simple interest loan, with no compensating balance required a interest due at the end of the year. 11 % D. A 8% annual rate on a simple interest loan, with a 20% compensating balance require and interest due at the end of the year.

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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You buy a home for $177,831 and put $11,459 down. You borrow the remainder. The mortgage company also charges a 3% loan and closing fee which you must also borrow. The interest rate is 6.5% for 30 years. Fill in the following to find the total cost of credit. Assume you make the monthly payments for the full number of years. Round to the nearest cent (2 decimal places). Do NOT put $ in your answer. After the down payment, you will need to borrow $ Including the loan and closing fee, the total amount financed will be $ Your monthly payment will be $ You will pay back $ total over the course of the loan. The total cost of credit will be $
A borrower has two alternatives for a loan: (1) issue a $300,000, 120-day, 8% note or (2) issue a $300,000, 120-day note that the creditor discounts at 8%. Assume a 360-day year. a. Calculate the amount of the interest expense for each option.$ for each alternative. b. Determine the proceeds received by the borrower in each situation. (1) $300,000, 120-day, 8% interest-bearing note $ (2) $300,000, 120-day note discounted at 8% $ c. Alternative is more favorable to the borrower because the borrower .
Please help me
LOA Bank Limited quotes a 9 percent interest rate on loans for 1 year. You are seeking a loan of $50,000 and as such you are expected to pay $4,500 in interest for the year. The terms of the loan require you to repay the principal and interest at the end of year one = $54,500. LOA Bank Limited thus requires you to pay $54,500 over a 12 month period, or $4,541.67, per month over the next 12 months.Is this a 9 percent loan? What rate should be legally quoted? What is the effective annual rate?Kindly show all workings in detail.
A payday loan is structured to obscure the true interest rate you are paying. For example, in Washington, you pay a $30 "fee" for a two-week $200 payday loan (when you repay the loan, you pay $230). What is the effective annual interest rate for this loan? (Assume 26 bi-weekly periods per year.) The effective annual interest rate is%. (Round to two decimal places.)
i
A company decides to obtain a small-business loan of $237,000. The financial institution from which the company borrows offers two options: a. Borrow $237,000 at 6% with monthly payments of $4,581.87 over 5 years. b. Borrow $237,000 at 7% with monthly payments of $2,751.77 over 10 years. Required: Record the issuance of an installment note payable under each option. Record the payments for the first and second month under each option. Determine the total amount of interest paid under each option over the full period of the note.
A floating rate mortgage loan is made for $185,000 for a 30-year period at an initial rate of 12 percent interest. However, the borrower and lender have negotiated a monthly payment of $1,480. Required: a. What will be the loan balance at the end of year 1? b. If the interest rate increases to 13 percent at the end of year 2, how much is the payment plus negative amortization in year 2 and year 5 if the payment remains at $1,480?
Miller borrows $370,000 to be paid off in four years. The loan payments are semiannual with the first payment due in six months, and interest is at 8%. What is the amount of each payment? Note: Use tables, Excel, or a financial calculator. Round your final answer to the nearest whole dollar. (FV of $1, PV of $1, FVA of $1, and PVA of $1). Multiple Choice О $62,451 О $118,400 $122,549 О $54,955
A floating rate mortgage loan is made for $170,000 for a 30-year period at an initial rate of 12 percent interest. However, the borrower and lender have negotiated a monthly payment of $1,360. Required: a. What will be the loan balance at the end of year 1? b. If the interest rate increases to 13 percent at the end of year 2, how much is the payment plus negative amortization in year 2 and year 5 if the payment remains at $1,360? Complete this question by entering your answers in the tabs below. Required A Required B What will be the loan balance at the end of year 1? Note: Do not round intermediate calculations. Round your final answer to 2 decimal places. Loan balance
You have a loan outstanding. It requires making nine annual payments of $5,000 each at the end of the next nine years. Your bank has offered to allow you to skip making the next eight payments in lieu of making one large payment at the end of the loan's term in nine years. If the interest rate on the loan is 4%, what final payment will the bank require you to make so that it is indifferent to the two forms of payment? The final payment the bank will require you to make is $ (Round to the nearest dollar.) I
Ross Land has a loan of $8,500 compounded quarterly for four years at 4%. What is the effective interest rate for the loan? Click here to view page 1 of the future value table. Click here to view page 2 of the future value table. The effective interest rate is %. (Round to two decimal places as needed.)

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