Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
4th Edition
ISBN: 9780134083278
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
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Textbook Question
Chapter 27, Problem 9P
Which of the following one-year $1000 bank loans offers the lowest effective annual rate?
- a. A loan with an APR of 6%, compounded monthly
- b. A loan with an APR of 6%, compounded annually, that also has a compensating balance requirement of 10% (on which no interest is paid)
- c. A loan with an APR of 6%, compounded annually, that has a 1% loan origination fee
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Consider a 48 month amortizing car loan with 6% APR and monthly payments. Which of the following statements is FALSE about that loan?
A. The monthly payment includes both interest and principal.
B. Interest portion of the payment equals loan balance times monthly interest rate.
C. The monthly interest rate charged on the loan is 0.5%.
D. The effective annual rate on that loan is less than 6%.
A person borrows $3,000 on a bank credit card at a nominalrate of 18% per year, which is actually charged at a rate of1.5% per month.
a. What is the annual percentage rate (APR) for the card?(See Example 5.6.8 for a definition of APR.)
b. Assume that the person does not place any additionalcharges on the card and pays the bank $150 eachmonth to pay off the loan. Let Bn be the balance owedon the card after n months. Find an explicit formulafor Bn .
c. How long will be required to pay off the debt?
d. What is the total amount of money the person will havepaid for the loan?
If you could please answer b and d for me I put the other 2 questions there in cases they where somehow apart of b and d
Determine the annual financing cost of a 1-year (365 day), $9,000 discounted bank loan at a stated annual interest rate of 10.0 percent. Assume that no compensating balance is required. Round your answer to two decimal places.
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Chapter 27 Solutions
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
Ch. 27.1 - Prob. 1CCCh. 27.1 - What is the effect of seasonalities on short-term...Ch. 27.2 - Prob. 1CCCh. 27.2 - What is the difference between temporary and...Ch. 27.3 - Prob. 1CCCh. 27.3 - Describe common loan stipulations and fees.Ch. 27.4 - What is commercial paper?Ch. 27.4 - How is interest paid on commercial paper?Ch. 27.5 - Prob. 1CCCh. 27.5 - What is the difference between a floating lien and...
Ch. 27 - Prob. 1PCh. 27 - Sailboats Etc. is a retail company specializing in...Ch. 27 - What is the difference between permanent working...Ch. 27 - Quarterly working capital levels for your firm for...Ch. 27 - Prob. 5PCh. 27 - Prob. 6PCh. 27 - Prob. 7PCh. 27 - Prob. 8PCh. 27 - Which of the following one-year 1000 bank loans...Ch. 27 - The Needy Corporation borrowed 10,000 from Bank...Ch. 27 - Prob. 11PCh. 27 - Prob. 12PCh. 27 - Prob. 13PCh. 27 - The Signet Corporation has issued four-month...Ch. 27 - Prob. 15PCh. 27 - Prob. 16PCh. 27 - Prob. 17PCh. 27 - Prob. 18P
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- For a bank loan assuming a one-year repayment period and 14% interest, the monthly payment is S (Round to the nearest cent.) For a bank loan assuming a one-year repayment period and 14% interest, the total cost is $ (Round to the nearest cent For the add-on loan method with one year repayment period and 12% interest, the monthly payment is S (Round to the nearest cent.) For the add-on loan method with one-year repayment period and 12% interest, the total cost is S (Round to the nearest cent If Shirley pays the bank loan back after six months, she will save"S (Round to the nearest cent) If Shirley pays the add-on loan back after six months, she will receive a rebatearrow_forwardThe loan below was paid in full before its due date. (a) Obtain the value of h from the annual percentage rate table. Then (b) use the actuarial method to find the amount of unearned interest, and (c) find the payoff amount. Regular Monthly Payment $414.84 APR 4.0% Remaining Number of Scheduled Payments after Payoff 18 Click the icon to view the annual percentage rate table. ... (a) h= $3.20 (b) The unearned interest is $ (Round to the nearest cent as needed.)arrow_forwardA payday loan is structured to obscure the true interest rate you are paying. For example, in Washington, you pay a $35 "fee" for a two-week $205 payday loan (when you repay the loan, you pay $240). What is the effective annual interest rate for this loan? (Assume 26 bi-weekly periods per year.) The effective annual interest rate is %. (Round to two decimal places.)arrow_forward
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