Cray Computing needs a 6-month loan for $300,000. Its bank quotes a simple interest rate of 11% on theloan. a.) What is the annual percentage rate (APR) if there is a compensating balance requirement of 30%of the loan amount? b.) What is the effective annual rate (EAR) if there is a compensating balancerequirement of 30% of the loan amount?

Loan amount=$300000Compensating balance=30%Simple interest rate=11%

Answered: Cray Computing needs a 6-month loan for…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 21MC: A customer takes out a loan of $130,000 on January 1, with a maturity date of 36 months, and an...

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Similar questions

A customer takes out a loan of $130,000 on January 1, with a maturity date of 36 months, and an annual interest rate of 11%. If 6 months have passed since note establishment, what would be the recorded interest figure at that time? A. $7,150 B. $65,000 C. $14,300 D. $2,383
Calculating interest and APR of installment loan. Assuming that interest is the only finance charge, how much interest would be paid on a 5,000 installment loan to be repaid in 36 monthly installments of 166.10? What is the APR on this loan?
Cray Computing needs a 8-month loan for $300,000. Its bank quotes a simple interest rate of 12% on the loan. What is the annual percentage rate (APR)? What is the period rate if there is a compensating balance requirement of 40% of the loan amount?
Cray Computing needs a 5-month loan for $300,000. Its bank quotes a simple interest rate of 15% on the loan. What is the effective annual rate (EAR)? What is the period rate if there is a compensating balance requirement of 20% of the loan amount
Cray Computing needs a 5-month loan for $300,000. Its bank quotes a simple interest rate of 15% on the loan. What is the effective annual rate (EAR)?
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?
Cray Computing needs a 5-month loan for $300,000. Its bank quotes a simple interest rate of 15% on the loan. What is the annual percentage rate (APR)?
A payday loan company charges a $40 fee for a $450 payday loan that will be repaid in 11 days using ordinary simple interest.Treating the fee as interest paid, what is the equivalent annual interest rate?
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?
Van Buren Resources Inc. is considering borrowing $100,000 for 182 days from its bank. Van Buren will pay $6,000 of interest at maturity, and it will repay the $100,000 of principal at maturity. a. Calculate the loan’s annual financing cost. b. Calculate the loan’s annual percentage rate. c. What is the reason for the difference in your answers to Parts a and b?
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?
A loan of $15,000 requires monthly payments of $477 over a 36-month period of time. These payments include both principal and interest. Solve, (a) What is the nominal interest rate (APR) for this loan? (b) What is the effective interest rate per year? (c) Determine the amount of unpaid loan principal after 20 months.

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