What discount rate should a lender charge to earn an interest of 2 1/4 % on a 90-day loan? Hint: An interest rate r and discount rate d are said to be equivalent if these two simple rates give the same present value for an amount due in the future. Thus, r = d/(1 - dt) and d = r/(1 + rt)

Q: Suppose the interest rate is3.6%. a. Having $650 today is equivalent to having what amount in one…

A: Given: Present value = $650 Periodic interest rate = 3.6% per period (annum)  n= number of periods =…

Q: loan

A: The real interest rate is the rate which shows the preference of the borrower to get the loan at the…

Q: Which of the following is the cheapest for a borrower? 6.7% annual money market basis 6.7%…

A: Interest rate are compounded than effective interest rate is more and effective interest rate is…

Q: T/F and why?

A: Real interest rate is the rate of interest that received by the investor after adjusting the…

Q: A company has a loan of 80,000 to be paid in 20 level annual payments. The interest and the…

A: Loans are paid by annual payments that carry the interest and loan amount but annual payments are…

Q: If there is a deflation rate of 2% and your account is earning a nominal interest rate of 1.75%,…

A: Deflation rate (d) = 2% Nominal interest rate (r) = 1.75%

Q: 2. Let the force of interest be 8(t) = 0.06 when t is between 0 and 10 and 8(t) = 0.06+.01(t-10) for…

A:

Q: Quantitative Problem: Bank 1 lends funds at a nominal rate of 9% with payments to be made…

A: Information Provided: Bank 1 Rate = 9% compounded semi-annually Bank 2 Rate Compounding = Quarterly…

Q: What should be the simple discount rate if a loan amount of P500,000 with a loan term of 3 years…

A: Loan amount (P) = P500,000 Loan proceeds (C) = P480,000 Loan term (t) = 3 Years Simple discount rate…

Q: thanks

A: Formula for compound interest is: A = P(1+r/n)^nt Where A is the future amount, P is the principal,…

Q: ic formula for present value, along with the given discount rate, r, and the number of periods, n,…

A: Present value = Future value * (1 + discount rate)-No. of periods

Q: The nominal interest rate on a loan is 12.5% and inflation is 3%. What is the real interest rate?

A: Information Provided: Nominal Rate = 12.5% Inflation = 3%

Q: If you borrow $100 at 5% interest rate (nominal) and inflation rate is 3%, what is the most accurate…

A: nominal interest rate = nr = 5% Inflation rate = ir = 3%

Q: Use the formula A=P(1+rt) to calculate the maturity value of the simple interest loan when…

A: formula: A=P(1+rt) where, p=principal r=rate  t=time in years

Q: What interest rate would make it worthwhile to incur a compensating balance of $15,000 in order to…

A: A compensating balance is a specific amount of money a borrower must maintain in an account with a…

Q: What do we know about a loan, which is said to have annuity payments? a. This loan has annual…

A: The loan can be referred to as the debt amount that the borrower takes till certain maturity period…

Q: You are planning on taking out a mortgage and would ake to determine the cash value for a given down…

A: Solution:- When a loan is taken, it can either be repaid as lump sum payment or in instalments.

Q: b) An APR of 5.875 produces an effective annual interest rate of 6.04% what is the compounding…

A: The effective annual rate is the actual return that the company owes to its investors.

Q: If the effective interest rate is 15%, what nominal rate of interest is charged for a c compounded…

A: Compounding continuously is imaginary situation which actually does not exist in real life…

Q: As a loan is paid off, the   monthly payment increases debt and interest portions do not change each…

A: Interest expenses on loan is calculated on the closing balance of the loan  account on a particular…

Q: Which of the following is false? I. A lower interest rate would increase the present value of an…

A: Solution: Present value means the value of cash flows in today’s terms.

Q: Suppose that the interest rate is 4%. What is the value of the discount factor, v? υ Enter a value…

A: An interest rate is given. We have to find the value of the discount factor and the discount rate.…

Q: True or False: PMI is usually charged at 0.5% to 1% of loan value. False True

A: Private mortgage insurance also called PMI

Q: Consider two 1-year loans with a principal of $1 million and a default probability of 2% each.…

A: To compute the 1-year 99% Value at Risk (VaR) and Expected Shortfall (ES) of a single loan, we need…

Q: For each of the following cases, indicate (a) what interest rate columns and (b) what number of…

A: The phrase "annual rate" means the interest rate or percentage that is applied to a loan, borrowing…

Q: What is the total amount you will pay if you do not pay the loan within the term and meet all the…

A: Step 1:Given: Loan amount = $5400Period of loan = 72 monthsFinal loan amount = $6965.35Interest is…

Q: Given this is the situation, how should I be calculating the APR for each form of debt? It is…

A: Debt is something that one party borrows from another, usually money. Debt is used to make large…

Q: a. What interest rate would make it worthwhile to incur a compensating balance of $15,500 in order…

A: The compensating balance is the balance amount of the loan that will be paid to avoid paying a…

Q: What is the maturity value of a loan of R64 000 earning an interest of R12 733?

A: Maturity value is the sum of principal loan and interest earned during the loan period

Q: Suppose that you want to take out a loan and that your local bank wants to charge you an annual real…

A: Compute the nominal interest rate: Nominal interest rate is calculated by using following formula:

Q: Task: Assume that at time 0 a sum L is lent for a series of n yearly payments. The rth payment, of…

A: Since 'L' amount is lent in exchange of yearly payments having specific interest rates, therefore, L…

Q: If an electric appliance present worth is P 11,712 and is being paid P 1,636 indefinitely, calculate…

A: Perpetuity means infinite no. of payments of same amount and made in equal intervals. Person can…

Q: Which of the following statements is CORRECT? Question 2 options: a) The proportion of the payment…

A: A. OPTION (a): IS WRONGAS TIME PASSES, THE OUTSTANDING BALANCE OF LOAN DECREASES, SO INTEREST…

Q: Calculating Real Rates of Return IfTreasury bills are currently paying 4.7 percent and the inflation…

A: Real rate of return refers to the return after the adjustment of the inflation rate.

Q: For compounding more frequently than annual, the effective interest rate Select one: a. is higher…

A: Effective annual rate is calculated for a nominal rate which is compounded more than once in a year,…

Q: Find the effective rate of interest corresponding to a nominal rate of 5.5% compounded…

A:

Q: Savings institutions often state a nominal rate, which can be thought of as a simple annual interest…

A: Nominal yield = 7% (Compounding daily)Number of days in a year = 365 days

Q: The APR is approximately double the add-on rate on an installment loan. True False

A: The APR (Annual Percentage Rate) is a measure of the true cost of borrowing, which includes not only…

Q: a) Determine the APR of the installment loan. APR= % b) How much interest will Ray save by paying…

A: As per the given information: Loan amount (Principal) - $12,000Payments per year (n) - 12Time period…

Q: 4. If you know the simple interest due on a P10 000 loan, explain how you can use that figure to…

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…

Q: Suppose that the interest rate is 1%. What is the value of the discount factor, v? v = 数字 Enter a…

A: Present value (PV) is a financial concept that measures the present value of money in the future and…