A bank makes a loan of $1,000,000 at a rate of 6% p.a. It also requires a compensating balance of 5%. What is the effective cost to the borrower? 6.05% 6.25% 6.32% 6.45% You invest $10,000 in a 270-day CD at a rate of 6%, compounded daily. What is the amount you receive at maturity? $10,460.24 $10,600.22 $11,200.35 $11,345.48
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A bank makes a loan of $1,000,000 at a rate of 6% p.a. It also requires a compensating balance of 5%. What is the effective cost to the borrower?
6.05%
6.25%
6.32%
6.45%
-
You invest $10,000 in a 270-day CD at a rate of 6%, compounded daily. What is the amount you receive at maturity?
$10,460.24
$10,600.22
$11,200.35
$11,345.48
-
Step by step
Solved in 3 steps
- A bank makes a loan of $1,000,000 at a rate of 6% p.a. It also requires a compensating balance of 5%. What is the effective cost to the borrower?Find the annual financing cost (AFC) or a 30 day line of credit where the bank requires a 10% compensating balance requirement. Assume you borrow $214,296m at 5.47% and you have $20,000 in the bank.Everett's Electronics is receiving a senior bank loan with the following terms: $6MM principal, 5.6% interest rate, 7 year loan term, 0.75% commitment fee, and a 1% closing fee. What is the expected annual return to the lender? A. 5.85% B. 6.85% C. 5.91% D. 6.2%
- A bank is offering a loan of $20,000 with an interest rate of 9%, payable with monthly payments over a 4-year period. a. Calculate the monthly payment required to repay the loan. b. This bank also charges a loan fee of 4% of the amount of the loan, payable at the time of the closing of the loan (that is, at the time the borrower receives the money). What effective interest rate is the bank charging?Ezze Mattress needs to raise $200,000 for 6 months. The bank quotes a discount interest rate of 7.5% but does not require compensating balances. What is the effective annual interest rate on this loan? Multiple choice question. 7.50% 8.11% 7.84% 7.81%The York Company has arranged a line of credit that allows it to borrow up to $45 milion at any time. The interest rate is .621 percent per month. Additionally, the company must deposit 3 percent of the amount borrowed in a non-interest bearing account. The bank uses compound interest on its line-of-credit loans. What is the effective annual rate on this line of credit? Multiple Choices 6.40% 7.71% 7.95% 7.06% 8.83%
- 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. d) What is the total amount of money the person will havepaid for the loan?Hagar Company's bank requires a compensating balance of 10% on a $100,000 loan. If the stated interest on the loan is 7%, what is the effective cost of the loan?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?
- Find the annual financing cost of a 45 day revolving credit agreement with a 0.5% commitment fee. Assume you borrow $377,863m at 5.96%. You can borrow up to $500,000. b.Find the annual financing cost (AFC) or a 30 day line of credit where the bank requires a 10% compensating balance requirement. Assume you borrow $211,895m at 5.39% and you have $20,000 in the bank.A bank charges a 12% bank discount on short-term loans. A borrower needs GH¢2000cash to be repaid with interest in 9 months. What size loan should he ask for, and how much interest will he pay?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