You've worked out a line of credit arrangement that allows you to borrow up to GHC 50 million at any time. The interest rate is 0.5 percent per month. In addition, 5 percent of the amount that you borrow must be deposited in a non- interest bearing account. Assume your bank uses compound interest on its line of credit loans. What is the effective annual interest rate on this lending arrangement? #randomized

You've worked out a line of credit arrangement that allows you to borrow up to GHC 50 million at any time. The interest rate is 0.5 percent per month. In addition, 5 percent of the amount that you borrow must be deposited in a non- interest bearing account. Assume your bank uses compound interest on its line of credit loans. What is the effective annual interest rate on this lending arrangement? #randomized

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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You've worked out a line of credit arrangement that allows you to borrow up to $70 million at any time. The interest rate is .375 percent per month. In addition, 4 percent of the amount that you borrow must be deposited in a noninterest-bearing account. Assume that your bank uses compound interest on its line-of-credit loans. a. What is the effective annual interest rate on this lending arrangement? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.1 b. Suppose you need $25 million today and you repay it in eight months. How much interest will you pay? Note: Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to 2 decimal places, e.g., 1,234,567.89. a. Effective annual rate b. Total interest paid %
You've worked out a line of credit arrangement that allows you to borrow up to $70 million at any time. The interest rate is .391 percent per month. In addition, 5 percent of the amount that you borrow must be deposited in a noninterest - bearing account. Assume that your bank uses compound interest on its line of credit loans. What is the effective annual interest rate on this lending arrangement? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e. g., 32.1 Suppose you need $15 million today and you repay it in eight months. How much interest will you pay? Note: Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to 2 decimal places, e.g., 1, 234, 567.89.
Consider a $5,000, 6%, 180-day interest-bearing note and a non-interest- bearing note for the same amount and time period with a bank discount of 6%. From the borrower’s point of view, which is the better loan and why?
To payoff a loan of $1000 you need to make 40 payment of $36.56 per month. What rate of interest are you paying? What is the stated or quoted rate? What is the annual percentage rate? What is the effective annual rate? What rate is bank likely to use to state its rate?
help with the question of "which is better and why"?
Find the following. (Round your answers to the nearest cent.) FinanceCharge Number ofPayments Frequency Amount Number ofPayments Left $9.10 12 Monthly $15 5 (b) the amount needed to pay off the loan
(Calculating an EAR) After examining the various personal loan rates available to you, you find that you can borrow funds from a finance company at 12 percent compounded quarterly or from a bank at 13 percent compounded daily. Which alternative is more attractive? If you can borrow funds from a finance company at 12 percent compounded quarterly, the EAR for the loan is entered in your response here -----%. (Round to two decimal places.) If you can borrow funds from a finance company at 13 percent compounded daily, the EAR for the loan is entered in your response here ------%. (Round to two decimal places.) Show excel formula/computation and manual
You are the loan department supervisor for a bank. This installment loan is being paid off early, and it is your task to calculate the rebate fraction, the finance charge rebate (in $), and the payoff for the loan (in $). (Round dollars to the nearest cent.) Amount Financed Number of Payments Monthly Payments Rebate Payment Made Fraction Finance Charge Rebate $4,700 36 $167.33 29 15/666 X $ 85.76 Loan Payoff x $785 89
You are the loan department supervisor for a bank. This installment loan is being paid off early, and it is your task to calculate the rebate fraction, the finance charge rebate (in $), and the payoff for the loan (in $). (Round dollars to the nearest cent.) Finance Amount Number of Monthly Payment Payments Made Rebate Loan Charge Rebate Financed Payments Fraction Payoff $4,700 36 $165.33 33
A 167 day simple interest loan for $10,456 has a maturity value of $10,961. What is the simple interest rate and the equivalent bank discount rate? Use Banker's Rule
You are the loan department supervisor for a bank. This installment loan is being paid off early, and it is your task to calculate the rebate fraction, the finance charge rebate (in $), and the payoff for the loan (in $). (Round dollars to the nearest cent.) Amount Financed Number of Monthly Payments Rebate Payments Payment Made Fraction Finance Charge Rebate $4,700 36 $167.33 29 15/666 X $85.76 Loan Payoff X $ 785.89 X
What is the finance charge?

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