a. What interest rate would make it worthwhile to incur a compensating balance of $15,500 in order to get a 0.65-percent lower interest rate on a 2-year, pure discount loan of $230,000? b. Is it worth incurring the compensating balance to obtain the lower rate? Complete this question by entering your answers in the tabs below. Required A Required B What interest rate would make it worthwhile to incur a compensating balance of $7,500 in order to get a 0.65-percent lower interest rate on a 2-year, pure discount loan of $150,000? Note: Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. Interest rate % < Required A Required B >
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- Which of the following statements is CORRECT? Question 2 options: a) The proportion of the payment that goes toward interest on a fully amortized loan increases over time. b) An investment that has a nomiral rate of 6% with semiannual payments will have an effective rate that is smaller than 6%. c) If a loan or investment has annual payments, then the effective, periodic, and nominal rates of interest will all be different. d) The present value of a 3-year, $150 ordinary annuity will exceed the present value of a 3-year, $150 annuity due. e) if a loan has a nominal annual rate of 7%, then the effective rate will never be less than 7%.Consider a loan repayment plan described by the following initial value problem, where the amount borrowed is B(0) = $40,000, the monthly payments are $600, and B(t) is the unpaid balance of the loan. Use the initial value problem to answer parts a through c. B' (+) =0.03B - 600, B(0) = 40,000 a) Find the solution of the initial value problem and explain why B is an increasing solution. B(t) = Why is B an increasing function? O A. The function is increasing because it is an exponential function with a positive coefficient and a negative exponent. O B. The function is increasing because it is an exponential function with a positive coefficient and a positive exponent. O C. The function is increasing because it is an exponential function with a positive exponent. O D. The function is increasing because it is an exponential function with a positive coefficient. b) What is the most that you can borrow under the terms of this loan without going further into debt each month? The…Suppose that you have the capacity to pay, would you rather borrow a loan that is amortized monthly or one that is amotized quarterly? what are your considerations when availing a loan (qualitative or quantitative) discuss.
- 6. Calculating simple interest and APR on a single-payment loan You are taking out a single-payment loan that uses the simple interest method to compute the finance charge. You need to figure out what your payment will be when the loan comes due. The equation to calculate the finance charge is: FsFs = P r t In the equation, FsFs is the finance charge for the loan. What are the other values? P is the amount of the loan. r is the stated rate of interest. t is the term of the loan in . You’re borrowing $4,000 for a year and a half with a stated annual interest rate of 10%. Complete the following table. (Note: Round your answers to the nearest dollar.)What discount rate should a lender charge to earn an interest of 2 1/4 % on a 90-day loan? Hint: An interest rate r and discount rate d are said to be equivalent if these two simple rates give the same present value for an amount due in the future. Thus, r = d/(1 - dt) and d = r/(1 + rt)1)I need help with finance homework questions asap please. Multiple choice question. All else equal, when deciding between two loan offers the loan that should be accepted is the one: With the most frequent compounding period. With the lowest annual percentage rate. With the least frequent compounding period. With the lowest stated interest rate. With the lowest effective annual rate.
- 1. In a loan amortization schedule, interest payments for each period would most probably a. Increase overtime c. Remain the same b. Decrease overtime d. There are no interest payments in the schedule 2. The formula (1 + i)n is also called a. present value factor for lump-sum payment b. future value factor for lump-sum payment c. present value factor for ordinary annuity d. future value factor for ordinary annuity 3. An increase in the present value may be caused by a. increase in the discount rate b. decrease in the discount rate c. discount rate does not affect the present value d. none of the above 4. Interest payments that are based on the original principal and previous interest recognized is based on a. present value c. simple interest rate b. future value d. compound interest rate 5. The time value of money suggest that a peso received today is worth a peso received in the future. a. less than c. the same as b. more than d. none of the aboveAssess the following statements: Simple interest calculations assume the interest earned is never reinvested. The real interest rate is the increment to purchasing power that the lender earns in order to induce him or her to forego current consumption. Earning a 5% interest rate with annual compounding is better than earning a 4.95% interest rate with semiannual compounding. For any positive interest rate the present value of a given annuity will be less than the sum of the cash flows and the future value of the same annuity will be greater than the sum of the cash flows. a. Three statements are incorrect. b. Two statements are incorrect. c. Only one statement is incorrect. d. All statements are correct.A. Given the data in the table and the information below, please answer the following parts. Show all working and formulas used. Maturity (T) Spot Rate (%) r(1) r(2) r(3) r(4) r(5) r(6) 0.05 0.28 0.12 0.07 The forward råte for a 3-year loan beginning in 2 years is 0.08%. The forward rate for a 2-year loan starting in 3 years is -0.16%. 1) Please calculate the 3-year spot rate. 2) Please calculate the 2-year spot rate.
- 4. If you know the simple interest due on a P10 000 loan, explain how you can use that figure to calculate the simple interest due on a P50 000 loan for the same time period and the same interest rate. 5. If the principal of a loan is doubled but the time period and interest rate remain the same, how many times as large is the simple interest due on the loan? 6. If the principal of a loan is tripled but the time period and interest rate remain the same, how many times as large is the simple interest due on the loan?ın which of the following situations would you prefer to be obtaining a loan? a. The interest rate is 9 % and the expected inflation rate is 6 %. b. The interest rate is 14 % and the expected inflation rate is 12 %. c. The interest rate is 18 % and the expected inflation rate is 20 % d. The interest rate is 30 % and the expected inflation rate is 55 %Assume you have the following asset and liability in your Balance Sheet: Asset - Bond A Modified Duration = 2.6 years Value = RM1.5 million Liability - Bond B Modified Duration = 3.1 years Value = RM1.0 million a. Calculate the duration gap. b. What is the expected change in Net Worth if interest increases by 1%? c. What should or could you to achieve immunised balance sheet? Note: Please show all workings.