TBTF Bank makes a 8 year interest only loan to AFC Inc of $4,150,000.00. The interest rate on the loan is i(4) = 7.250%, and the payments will be made annually. TBTF reinvests the payments at an interest rate of i(26) = 8.625%. At maturity, what is TBTF Bank's annual ROI over the lifetime of the loan? (AFC does not default.) a.7.783% b.6.382% c.7.394% d.6.849% e.6.537%

TBTF Bank makes a 8 year interest only loan to AFC Inc of $4,150,000.00. The interest rate on the loan is i(4) = 7.250%, and the payments will be made annually. TBTF reinvests the payments at an interest rate of i(26) = 8.625%. At maturity, what is TBTF Bank's annual ROI over the lifetime of the loan? (AFC does not default.) a.7.783% b.6.382% c.7.394% d.6.849% e.6.537%

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter13: Capital, Interest, Entrepreneurship, And Corporate Finance

Section: Chapter Questions

Problem 6QFR

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