NOP Co. has agreed to the following loan proposal by a bank: ▪ Stated interest rate of 10% on a one-year discounted note ▪ 15% of the loan as compensating balance with zero-interest current account to be maintained with the bank. ▪ The loan will have net proceeds of P1,500,000. Required: 1. How much is the principal amount of the loan?
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NOP Co. has agreed to the following loan proposal by a bank:
▪ Stated interest rate of 10% on a one-year discounted note
▪ 15% of the loan as compensating balance with zero-interest current account to be maintained with the bank.
▪ The loan will have net proceeds of P1,500,000.
Required:
1. How much is the principal amount of the loan?
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- Pedro Gil Company must maintain a compensating balance of P50,000 in its checking account as one of the conditions of its short-term 6% bank loan of P500,000. Pedro Gil’s checking account earns 2% interest. Ordinarily, Pedro Gil would maintain a P20,000 balance in the account for transaction purposes. What is the loan’s approximate effective interest rate? Please show your solution.Royal Bank charges administration fees of 2.9% of the loan amount per annum. Target Corporation has negotiated an interest rate of 10.5% per annum on a long-term loan the company wants to take from the bank. The compensating balance (b) is 4%, and there is 11% reserve requirement (RR). What is the contractually promised rate of return to the bank from the loan? (Instructions: Please round your answer to 4 decimal places and do not show it in percent. If the answer is 2.5678%, enter 0.0257)Mr samuel approached the arnett national bank for a 15,000 loan to purchase vehicle the bank charges interest at the rate of 18 percentage per annum for the duration of the loan the bank also charges the followin fees :BANK FEES 8 percent, stamp duty 0.1 percent,legal fees 7.5 percent, application fee 1 percent a 20 percent deposit of the amount of the loan must also be made if the loan is approved .Calculate: the total amount paid of the fees charged by bank
- The Premiere Company obtained a short-term bank loan for P1,000,000 at an annual interest rate 12%. As a condition of the loan, Premiere is required to maintain a compensating balance of P300,000 in its checking account. The checking account earns interest at an annual rate of 3%. Premiere would otherwise maintain only P100,000 in its checking account for transactional purposes. Required: Compute for the effective interest rate assuming: a. Loan is not discounted. Loan is without compensating balance. b. Loan is discounted. Loan is without compensating balance. c. Loan is not discounted. Loan is with compensating balance. d. Loan is discounted. Loan is with compensating balance. e. Which of the loan arrangements above is most beneficial to the firm? Justify.14. A company obtained a short-term loan of P250,000 an at annual interest rate of 6%. As a condition of the loan, the company is required maintain a compensating balance of P50,000 in a checking account. The company's checking account earns interest at an annual rate of 2%. Ordinarily the company maintains balance of P25,000 in its checking account for transaction purposes. What is the effective interest rate of the loan?Brothers Corporation borrows P70,000.00, annual interest rate of 19% is deducted in advance. What is the amount of proceeds the company will receive at the time of the loan and what is the effective interest rate choose the letter of the correct answera. P13,300.00 and 19%b. P26,700.00 and 19%c. P13,300 and 23.5%d. P23,300.00 and 19%e. P56,700.00 and 23.5%
- The company purchased the equipment 600,000. The interest rate of bank is 12,400. The loan is denominated in OMR, matures on March 31 2019. The spot rate of OMR 2.50. What is the value of interest expenses? Select one: a. None of the other points b. OMR 12,400 c. OMR 1,500,000 d. OMR 31,000A 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?A Forward Rate Agreement contains an agreed interest rate of 5.75% on a 6-month loan. If settled at the time of borrowing, what amount would the borrower pay or receive on an $850,000 loan if the prevailing 6-month interest rate is 4.25%? $11,500.76 receipt $12.056.74 receipt $12,056.74 payment $12.230.22 payment O$12.230.22 receipt $11.500.76 payment
- A bank offered a 1-year loan to a commercial customer. The instrument is a discounted note with a nominal rate of 13%. What is the effective interest rate to the borrower? 13.20% 14.94% 12.00% 10.71% 13.64%The company purchased the equipment 600,000. The interest rate of bank is 12,400. The loan is denominated in OMR, matures on March 31 2019. The spot rate of OMR 2.50. What is the value of interest expenses?Select one:a. OMR 12,400b. OMR 1,500,000c. OMR 31,000d. None of the other pointsUse the United States Rule and/or the Banker's Rule to determine the balance due on the loan at the date of maturity. The effective date is the date the loan was written. A day counting table may be found in the Consumer Mathematics chapter of your textbok. Principal: $12,000.00 Rate: 9.5% Effective Date: March 22 Maturity Date: December 5 Partial Payment Amount: $7,000.00 Partial Payment Due: August 30 O $5,127.99 O $5,478.74 O $5,614.52 O $5,650.87 4