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. What rate should be legally quoted? Kindly show all workings in details
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. What rate should be legally quoted? Kindly show all workings in details
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 14P
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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.
What rate should be legally quoted?
Kindly show all workings in details
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