Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Problem E: Effective cost of Short‐term Loan:
ABC will be acquiring a P4,000,000 loan from XYZ Bank. 13. The detail are 6‐month term, 3% interest, P40,000 bank charge
and P50,000 compensating balance.
Required:
13. How much is the compound effective annual interest?
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- What are the annual payments necessary to pay a $1,000,000, 12-year loan if the loan rate is 8 %? $80,333. $190,968 $80,000. $132,700.arrow_forward\A man loans $4,000 at one interest rate and $5,000 at a 1% greater rate. The $5,000 loan earns $110 more per year than the $4,000 loan earns. Determine the following: The interest rates. Explain the concepts/principles that were considered and the factors that affected the condition of item (a)arrow_forwardLoan payments of $2,400 due 97 days ago and $4,450 due today are scheduled to be repaid with a payment of $3,940 in 33 days and the balance in 130 days. If money earns 6% p.a. simple interest, what is the size of the final payment? Use 130 days from today as the focal date.arrow_forward
- solve without chat gpt A bank is offering aloan of $25,000 with a nominal interest rate of 18% compoundedmonthly, payable in 60 months. (Hint: The loan origination fee of2% will be taken out from the loan amount.)a) What is the monthly payment?b) If a loan origination fee of 2% is charged at the time of theloan, what is the What is the monthly payment?arrow_forwardLoan 1: $200,000 at 4.5% for 30 years, monthly payments, and no origination cost. APR = 4.80% Loan 2: $200,000 at 4.25% for 30 years, monthly payments, and no origination cost. What is the discount point charged on Loan 1 assuming there is no cost associated with the origination? How many points must be charged on the 2nd loan to equalize the APR on the two loans? Please show how to solve using an excel spreadsheetarrow_forwardGive typing answer with explanation and conclusionarrow_forward
- 2. A loan earns an interest of 12% compounded- quarterly and should be paid within 6 yrs. How much is the loan if the mode of payment is made this way: CFD *focal point at 4, and draw a cash flow diagram LIFT 2 3 4 $ 15,000 $ 30,000 P 0 1 $ 20,000 5 i=12% compounded quarterly F = P(1 + i)n P=F(1+i)" 6 $40,000 REMEMBER THIS!arrow_forwardYou have been assigned to estimate the interest rates that your company may have to pay when borrowing money in the near future. The following information is available.kPR = 2%MR = 0.1% for a 1 year loan increasing by 0.1% for each additional yearLR = 0.05% for a 1 year loan increasing by 0.05% for each additional yearDR = 0 for a 1 year loan, 0.2% for a 2-year loan, increasing 0.1% for each additional yearExpected Inflation Rates Year 1 = 7% Year 2 = 5% Year 3 and thereafter = 3% a. Calculate the inflation adjustment (INFL) for a 5-year loan. b. Calculate the appropriate interest rate for a 5-year loan.arrow_forwardConsider a 4-year amortizing loan. You borrow $2,400 initially and repay it in four equal annual year-end payments. a. If the interest rate is 10%, what is the annual payment? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Annual payment $ ✓Answer is complete and correct. Time b. Prepare an amortization schedule. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Leave no cells blank - be certain to enter "0" wherever required. 1 2 3 4 Loan Balance (S) 2,400.00 2,400.00 757.13 1,882.87 x 1,314.03 688 Answer is complete but not entirely correct. Year-End Interest Due on Loan Balance (5) 240.00 188.29 131.40 68.83 Total Year- End Payment ($) 10 757.13 757.13 757.13 757.13 Amortization of Loan (S) 0 517.13 568.84 625.73 688.30arrow_forward
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