ABC is inclined to take a bank loan that has a face amount of P5,000,000, a term of 6 months, interest of 10%, and required compensating balance of P700,000. Compute for the following: 1. How much is the simple effective annual interest of the loan? 2. Should ABC accept this loan if another loan has similar terms but has a simple effective cost of 11%?
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- Your firm is considering a one-year loan for $522,000. The fees are 2% of the loan amount and the interest rate is 4.3%. First, compute the net amount of funds from the loan. Based on this net amount, what is the true interest rate of the loan?ABC is inclined to take a bank loan that has a face amount of P5,000,000, a term of 6 months, interest of 10%, and required compensating balance of P700,000. How much is the simple effective annual interest of the loan? Should ABC accept this loan if another loan has similar terms but has a simple effective cost of 11%?Your business requests a 3-month loan for $500,000. What will be the interest paid at the end of the term if the business risk percentage is assessed at 2.0% and LIBOR is at 2.1%?
- Your firm is considering two one-year loan options for a $506,000 loan. The first carries fees of 2.4% of the loan amount and charges interest of 3.6% of the loan amount. The other carries fees of 1.8% of the loan amount and charges interest of 4.7% of the loan amount. a. What is the net amount of funds from each loan? b. Based on the net amount of funds, what is the true interest rate of each loan?In a discount interest loan, you pay the interest payment up front. For example, if a 1-year loan is stated as $42,000 and the interest rate is 8.50%, the borrower “pays” 0.0850 × $42,000 = $3,570 immediately, thereby receiving net funds of $38,430 and repaying $42,000 in a year. a. What is the effective interest rate on this loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b. What is the effective annual rate on a 1-year loan with an interest rate quoted on a discount basis of 18.50%? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)3a)A loan of £16,000 is repaid by annual payments of £1,500 each at the end of the year. How long does it take to repay the loan on the basis of an interest rate of 1% p.a.? b)Suppose the payment at t=11 is increased to repay the loan (a balloon payment).What is the value of the payment at t=11? c)Alternatively, the loan may be repaid via a payment at t=12 (a drop payment).What is the value of the payment at t=12? could you please help me with this question
- If you borrow $1,000 at 8.5% simple interest and the loan requires a lump sum payment of $1,213.16, what is the term of the loan? (Round your answer to the nearest whole number.)t = daysPaymaster Enterprises has arranged to finance its seasonal working capital needs with a short term bank loan. The loan will carry a rate of 0.072 per anum paid in advance (discounted). If Paymaster plans to borrow $760000 for a period of 7 months, what is the cost of the loan.a) You expect to incur a cost and make a payment of £35,000 in one year. You areplanning to take a loan then to cover the expense, and repay the loan a one yearlater. Currently, a one-year and two-year interest rates are 1.15% and 1.25%,respectively. What forward rate would you expect to be applicable to your loan? Ifthere was a forward rate agreement available in the market, offering 1.2% over aone-year period starting in one year from now, would you use it? Explain.Assuming you did enter into this agreement, analyse the relevant gains or losses.
- A borrower has secured a 30 year, $150,000 loan at 7% with monthly payments. Fifteen years later, an investor wants to purchase the loan from the lender. If market interest rates are 5%, what would the investor be willing to pay for the loan? (Correct Anwser: C) A:$75,000 B:$111,028 C:$118,478 D:$168,646 How to solve this problem? Give typing answer with explanation and conclusiona)loan of £16,000 is repaid by annual payments of £1,500 each at the end of the year. How long does it take to repay the loan on the basis of an interest rate of 4% p.a.? b)Suppose the payment at t=14 is increased to repay the loan (a balloon payment). What is the value of the payment at t=14? Enter an answer correct to 2 decimal places c)Alternatively, the loan may be repaid via a payment at t=15�=15 (a drop payment). What is the value of the payment at t=15? Enter an answer correct to 2 decimal placesSuppose your firm is seeking a three-year, amortizing $400,000 loan with annual payments, and your bank is offering you the choice between a loan of $415,000 with a compensating balance of $15,000 and a loan of $400,000 without a compensating balance. The interest rate on the $400,000 loan is 9.5 percent. How low would the interest rate on the loan with the compensating balance have to be for you to choose it? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Interest rate 8.73 %