TBTF Bank makes a 12 year loan to AFC Inc of $1,600,000.00. The interest rate on the loan is i(2) = 14.000%, and the loan will be repaid with level monthly payments. TBTF reinvests the payments at an interest rate of i(52) = 15.750%. At maturity, what is TBTF Bank's annual ROI over the lifetime of the loan? (AFC does not default.) a.16.099% b.16.421% c.17.064% d.15.294% e.19.318%
TBTF Bank makes a 12 year loan to AFC Inc of $1,600,000.00. The interest rate on the loan is i(2) = 14.000%, and the loan will be repaid with level monthly payments. TBTF reinvests the payments at an interest rate of i(52) = 15.750%. At maturity, what is TBTF Bank's annual ROI over the lifetime of the loan? (AFC does not default.) a.16.099% b.16.421% c.17.064% d.15.294% e.19.318%
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
ChapterB: Differential Calculus Techniques In Management
Section: Chapter Questions
Problem 7E
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TBTF Bank makes a 12 year loan to AFC Inc of $1,600,000.00. The interest rate on the loan is i(2) = 14.000%, and the loan will be repaid with level monthly payments. TBTF reinvests the payments at an interest rate of i(52) = 15.750%. At maturity, what is TBTF Bank's annual ROI over the lifetime of the loan? (AFC does not default.)
a.16.099%
b.16.421%
c.17.064%
d.15.294%
e.19.318%
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