ost of bank loan Data Back-Up Systems has obtained a $25,000, 90-day bank loan at an annu ayable at maturity. (Note: Assume a 365-day year.) How much interest (in dollars) will the firm pay on the 90-day loan? Find the 90-day rate on the loan. Annualize your result in part b to find the effective annual rate for this loan, assuming that it is r roughout the year under the same terms and circumstances. The amount of interest on the loan is $ 863.01. (Round to the nearest cent.) The effective 90-day rate is 3.45%. (Round to two decimal places.) The effective annual rate is %. (Round to two decimal places.)
ost of bank loan Data Back-Up Systems has obtained a $25,000, 90-day bank loan at an annu ayable at maturity. (Note: Assume a 365-day year.) How much interest (in dollars) will the firm pay on the 90-day loan? Find the 90-day rate on the loan. Annualize your result in part b to find the effective annual rate for this loan, assuming that it is r roughout the year under the same terms and circumstances. The amount of interest on the loan is $ 863.01. (Round to the nearest cent.) The effective 90-day rate is 3.45%. (Round to two decimal places.) The effective annual rate is %. (Round to two decimal places.)
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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Transcribed Image Text:Cost of bank loan Data Back-Up Systems has obtained a $25,000, 90-day bank loan at an annual interest rate of 14%,
payable at maturity. (Note: Assume a 365-day year.)
a. How much interest (in dollars) will the firm pay on the 90-day loan?
b. Find the 90-day rate on the loan.
c. Annualize your result in part b to find the effective annual rate for this loan, assuming that it is rolled over every 90 days
throughout the year under the same terms and circumstances.
a. The amount of interest on the loan is $ 863.01. (Round to the nearest cent.)
b. The effective 90-day rate is 3.45 %. (Round to two decimal places.)
c. The effective annual rate is %. (Round to two decimal places.)
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