Sunland Contractors borrowed $1.65 million at an APR of 7.0 percent. The loan called for a compensating balance of 15 percent. What is the effective interest rate on the loan (Round answer to 1 decimal place, e.g. 12.5%.)

Sunland Contractors borrowed $1.65 million at an APR of 7.0 percent. The loan called for a compensating balance of 15 percent. What is the effective interest rate on the loan (Round answer to 1 decimal place, e.g. 12.5%.)

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

See similar textbooks

Related questions

Q: Cerise Company would record a note payable of________, if the terms of the loan with a bank are as…

A: PRESENT VALUEPresent Value is the Current Value of Future Cash Flows at a Discounting Rate.Present…

Q: Jayson made a loan with a 8.5% interest rate that is equal to 3,559.38 and its principal is 225,000.…

A: Time value of money concept says that there can be present value and future value of money. Future…

Q: Daisy's LLC borrowed $2.40 million at an APR of 9.0 percent. The loan called for a compensating…

A: The effective interest rate on a loan is the actual interest rate that a borrower will pay on a loan…

Q: What is the new maturity value of the loan? Round your answer to the nearest cent. Do not round…

Q: Consider the following loan. Complete parts (a)-(c) below. An individual borrowed $87,000 at an APR…

A: Here, Borrowed Amount is $87,000 APR is 5% Time Period is 19 years Monthly Payment is $592

Q: Idaho International Inc. borrows $86,600 from a bank at 3.08% compounded semi-annually for 7 years…

A: Here,Compound = Semiannually = 2Present Value = pv = $86,600Interest Rate = r = 3.08 / 2 = 1.54%Time…

Q: A financial institution made a $2,000,000 1-year discount loan at 11% interest, requiring a…

A: Effective interest rate on the loan with compensatory balance is always higher than the stated…

Q: he company will pay $2,000 per month to repay the loan. The bank will charge .75% est per month on…

A: In this we have to calculate present value FACTOR and from that we can get months required.

Q: The annual rate of interest on a mortage loan is 11 1/2% the monthly interest payment is $453.76..…

A: Annual interest rate = 11.5% Monthly interest rate = Annual interest rate / 12 = 11.5%/ 12…

Q: Troy borrowed Php271,050 at simple interest of 12.21% for 2 years. Compute for the interest and…

A: Simple interest is one of the form of interest which is being charged on amount borrowed but without…

Q: A company financed the purchase of a machine with a loan at 2.5% compounded monthly. This loan would…

A: Present Value of Ordinary Annuity refers to the concept which gives out the discounted or today's…

Q: Compute the specified quantity. Your total payment on a 3 year loan, which charged 10% annual simple…

A: Time value of money is one of the important concept being used in accounting and finance. As per…

Q: A local business received a $45,000 loan at 4.95% compounded semi-annually. The business settled the…

A: Here, Value of Loan is $45,000 Interest Rate is 4.95% Monthly Payment is $650 Compounding Period is…

Q: Consider a loan of $98,000 at 7% compounded annually, with 12 annual payments. Find the following.…

A: Loan amortization can be defined as the procedure of amortizing the loan in such a way that the loan…

Q: Interest of $429.48 was charged on a loan of $9500 over a period of 7 months. What simple rate of…

A: Simple Interest is the method of calculation in which there is no compounding. That is ony the…

Q: A loan company advertises that $100 borrowed for one year may be repaid by 12 monthly installments…

A: Effective annual interest is the amount which is expressed in terms of percentage paid annually to…

Q: Hernandez Engineering borrows $5,500, at 6 1 2 % interest, for 150 days. If the bank uses…

A: Detailed explanation:1. Principal amount borrowed: $5,500 Interest rate: 6.12% (converted from…

Q: ABC Company acquired a loan from New Kensington Bank in the amount of $120,000 with a 8% interest…

A: The question is related to Effective Interest rate. The details given are Amount of loan =…

Q: Automotive Excellence Inc. borrowed $16,000.00 on April 16 with an interest rate of 4.9% per annum.…

A: An interest rate is the cost of borrowing money or the return on investment for lending money,…

Q: A loan with a 3.2% simple interest rate has accrued $498 in miterest. How much fime has passed if…

A: This is a loan which is based on simple interest. In case of simple interest the interest amount is…

Q: Kingsley Toyota borrowed $175,000 from a local bank. The loan requires Kingsley to pay 15 equal…

A: The present value of all monthly payments and present value of balloon payment should be equal to…

Q: H. CANSY Merchandising borrowed P800,000 from ABC Bank at 10% simple interest or one year and six…

A: H) Amount borrowed (A) = P 800000 r = 10% simple interest rate n = 1 year 6 months = 1.5 years

Q: $13,376.39 was the interest earned on lending $94,600.00 for 7 years, what was the quarterly…

A: In compounding there is interest on interest including the principal amount and more is compounding…

Q: Automotive Excellence Inc. borrowed $17,000.00 on March 4 with an interest rate of 8.6% per annum.…

A: The objective of the question is to calculate the final payment made by Automotive Excellence Inc.…

Q: A local business received a $45,000 loan at 4.95% compounded monthly. The business settled the loan…

A: Loan repayments of equal amounts can be defined as an annuity. The principal amount of loan is the…

Q: lender engages in a 15-day $1,000,000 reverse repo at a rate of 2.50%. The haircut is 2%. The…

A: In a reverse repo, the borrower will have to will give the collateral to lender and the lender will…

Q: What is the rate of interest on a loan of $2,000, for 282 days, if the amount of interest is…

A: When the lender lends a loan to the borrower, he charges a rate of interest on the borrowed amount.…

Q: Assume that a firm has a $1,000,000 line of credit at an 4.94 percent rate of interest that requires…

Q: A company takes out a six-year, $410,000 long-term loan on March 1. The interest rate on the loan is…

A: The process of raising money or capital to support investment or commercial ventures is referred to…

Q: a. What was the balance of the loan at the end of the first year? Round to the nearest cent b. What…

A: Given loan = $170,000Here, P = $170,000 r = 5.75% = 5.75/100 = 0.0575t =1n = 2 (as compound semi…

Q: Stinson Corporation borrowed $85,000 at 8% compounded quarterly to buy a warehouse. Monthly payments…

A: Here, To Find: Amortization schedule showing last 2 payments =? Total amount paid to settle the…

Q: original

A: Formula to calculate the loan amount is: PV = FV/(1+i)^n Where PV is the present value FV is the…

Q: Calculate the amount of interest that will be charged on $6290 borrowed for 2 months at 10.1%.…

A: Amount Borrowed (P)=$6290Interest Rate (R)=10.1%Time in months (T)=2 monthsRequired:Simple Interest…

Q: using the ordinary interest method, find the amount of interest on a loan of $5,000 at 10 1/2%…

A: Loan amount = $5,000 Period of loan = 274 days Interest rate = 10 1/2%

Q: What is the lender's yield for a $350,000 loan amortized over 15 years at a 5.5% interest rate.…

A: Lender's yield is calculated by first computing the annual payment on the loans at the given rate of…

Q: A local business received a $45,000 loan at 4.0 compounded semi-annually. The business sett oan with…

A: Loans are paid by the equal monthly payments and these payments carry the payment for interest and…

Q: Simple Interest: A $45,000 loan at 3.75% dated June 10 is due to be paid on October 11. Using…

A: Ordinary interest method is one in which the rate of interest is divided by 360 days convention…

Q: Stellar Company purchased a machine at a price of $92,700 by signing a note payable, which requires…

A: Notes are also known as promissory notes which are a sort of debt instrument stating a promise to…

Q: Ackerman Company enters into an IRG arrangement with Westbank for a 9 months, $800,000 loan starting…

A: nominal interest = 8% no. of compounding periods =12/3…

Q: nterest rate charged on the loan was 3.5% co

A: Answer : Amount = $15000 Time = 6 year 6 month Rate of interest = 3.5% Interest compounded monthly…

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Effective rate on loan meaning

VIEW

Step 2: Calculation of interest on loan

VIEW

Step 3: Calculation of Compensating balance

VIEW

Step 4: Calculation of Amount actually received

VIEW

Step 5: Calculation of Effective rate of interest

VIEW

Solution

VIEW

Step by step

Solved in 6 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

$7500 was borrowed for a four-year term at 9% compounded quarterly. The terms of the loan allow prepayment of the loan based on discounting the loan's maturity value at 7% compounded quarterly. How long (to the nearest day) before the maturity date was the loan prepaid if the payout amount was $9380.24 including accrued interest? For the purpose of determining the number of days in a partial calendar quarter, assume that a full quarter has 91 days.
A loan payment of $3200 was due 3 months ago, and another payment of $1800 is due in 6 months from now. When should a single payment of 5800.00 be paid to settle the debt if interest is to be 2%?
How is this wrong?
The simple interest charged on an 8-month loan of $95,000 is $974. Find the simple interest rate. (Round your answer to one decimal place.)
K- Automotive Excellence Inc. borrowed $19,000.00 on April 8 with an interest rate of 5.9% per annum On June 17, $5900.00 was repaid, and on August 9, $6400.00 was repaid. Automotive Excellence paid the balance of the loan on December 1 What was the final payment? The final payment was $ (Round the final answer to the nearest cent as needed Round all intermediate values to six decimal places as needed) DR
A mortgage loan having a face value of \$ \\$ 265,000 \$ is arranged by a mortgage broker. From this face value, the broker deducted a fee of \$ \\$ 4,000 \$. The mortgage is written at a contract rate of \$ 3.2 \\% \$ compounded semiannually for a twenty-five year term, with monthly payments. What is the annual cost of borrowing, including the brokerage fee, expressed as an effective interest rate? \$ 3.00 \\% \$ \$ 3.37 \\% \$ \$ 3.73 \\% \$ \$ 4.15 \\% \$ \$ 4.09 \\% \$
Data Back-Up Systems has obtained a $29,000, 90-day bank loan at an annual interest rate of 15%, 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. Answers a. The amount of interest on the loan is $___. (Round to the nearest cent.) b. The effective 90-day rate is___%. (Round to two decimal places.) c. The effective annual rate is___%. (Round to two decimal places.)
The Mutt Hut Pet Shop borrowed $59,000 on March 1 for 132 days. The rate was 11% using the ordinary interest method. On day 30 of the loan, The Mutt Hut made a partial payment of $18,000, and on day 59 of the loan, The Mutt Hut made a second partial payment of $10,500. a. What is the new maturity value of the loan? Round your answer to the nearest cent. Do not round intermediate calculations. $
FIVESIX Company, a lending institution lent P2,000,000 at 8.0000% perannum, to LAMANEH, Inc. The loan is payable after 5 years. Thecompany incurred direct origination costs of P200,000 and indirectorigination costs of P50,000. The company also charged origination feesto the borrower amounting to P295,000.The implicit interest rate on this loan is 9.2284%How much is the initial carrying value of the loan receivable?
Statue Builders, Inc. took out a loan for $251375 that has to be repaid in 8 equal annual installments. The APR on the loan is 6.33 percent. How much of the second payment is interest?
Acme Industries Ltd. borrowed $50,000 and amortized the loan over 10 years at a rate of j1=8.00%. They will make monthly payments on the loan. a) Calculate the monthly loan payment rounded UP to the next cent: b) What is the balance owing on the loan after 3 years?
The financial officer of Toys and Noise arranges a loan of $8,500, at 8.5% interest, for 35 months. Find the amount of simple interest. (Round to the nearest cent.) O $1,445.00 O $2,107.29 O $2,528.75 O $2,914.29

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS