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- Cost of Bank Loan Mary Jones recently obtained an equipment loan from a local bank. The loan is for 15,000 with a nominal interest rate of 11%. However, this is an installment loan, so the bank also charges add-on interest. Mary must make monthly payments on the loan, and the loan is to be repaid in 1 year. What is the effective annual rate on the loan (assuming a 365-day year)?Del Hawley, owner of Hawleys Hardware, is negotiating with First City Bank for a 1-year loan of 50,000. First City has offered Hawley the alternatives listed here. Calculate the effective annual interest rate for each alternative. Which alternative has the lowest effective annual interest rate? a. A 12% annual rate on a simple interest loan, with no compensating balance required and interest due at the end of the year b. A 9% annual rate on a simple interest loan, with a 20% compensating balance required and interest due at the end of the year c. An 8.75% annual rate on a discounted loan, with a 15% compensating balance d. Interest figured as 8% of the 50,000 amount, payable at the end of the year, but with the loan amount repayable in monthly installments during the yearRed Lizard Construction just borrowed $57,000.00. The terms of the loan require the company to make equal monthly payments forever. The first monthly payment is due in 1 month. If the regular monthly loan payment is S 550.00, then what is the EAR of the loan? A rate less than 9.62% or a rate greater than 12.53% A rate equal to or greater than 9.62% but less than 10.91% A rate equal to or greater than 11.90% but less than 12.53% A rate equal to or greater than 11.40% but less than 11.90% A rate equal to or greater than 10.91% but less than 11.40%
- Suppose you want to apply for a loan of $500,000 with repayment tenure of 5 years. The interest rate charged on the loan is 11% and the processing fee is 1.5% and insurance cost is $5,700. Annual payments are made. The APR of the loan will be 11.53% О 11.25% 11.00% 12.50%KBL Bank Limited quotes a 21 percent interest rate on one-year loans. So, if you borrow $75,000, the interest for the year will be $15,750. Because you must repay a total of $90,750 in one year, the Bank requires you to pay $7,562.50 per month ($90,750/12) over the next 12 months. a) Is this a 21 percent loan? What rate would legally have to be quoted? What is the effective annual rate?We assume that we have a secured a loan of $10,000 from a bank which will be paid in one year. The bank has offered you $850 monthly installments, which equates to a 3.67% annualized interest rate. The monthly interest rate of 0.31% is the annual rate divided by 12. You know that the interest is paid at the end of the period, so you can multiply the opening balance by the monthly interest rate to get the interest paid. What is the interest rate to be paid for the month of October? Month Payment Interest Principal Opening Balance Closing Balance January $850.00 $10,000.00 February $850.00 March $850.00 April $850.00 May $850.00 June $850.00 July $850.00 August $850.00 September $850.00 October $850.00 November $850.00 December $850.00 Monthly Rate 0.31% Annual Rate 3.67% Total Interest Paid Group of answer choices…
- SunBlush Technologies takes out a $16,000 loan that charges 5.25% interest compounded semi-annually has fixed quarterly payments of $650. Answer the following questions. For full marks your answer should be rounded to the nearest cent. a) How long will it take to pay off the loan? Your answer should be rounded to the appropriate whole period. 0 years, 0 months b) What is the principal component of the 20th payment? Principal = $0.00 c) What is the interest component of the 9th payment? Interest = $0.00 d) How much is the principal reduced by payments 15 through 18? Principal = $0.00 e) What is the total interest paid for payments 1 through 4? Interest = $ 0.00Your company borrows $500,000 from a bank to finance the purchase of a new machine. The nominal annual Interest rate Is 8%. The loan is to be fully amortized over 2 years, with equal payments made at the end of each 6-month perlod. 1. What will be the total amount of loan principal repald during the entire first year? 2. What will be the total amount of Interest pald during the entire second year? (Note: For each question, please show detalled explanations as to how you proceed to your answer along with detailed calculations).A lender makes a 10 year loan of 120,000 which is to be paid by level payments at the end of each month. The interest rate for the initial loan is 6 percent, nominal. After the 4'th year (48'th payment), the loan is sold to another investor, who wishes to make 3 percent interest (annual effective) off of the investment. But the borrower's payments remain the same. What is the selling price?
- To repay a $35,000 loan you will make 30 equal annual payments (starting one year from today) of $4,998.10. What is the interest rate on the loan? If you don’t have a financial calculator, you can use the fact that it is one of the following rates. a) 8% b) 10% c) 12% d) 14% e) 16%Suppose you take a 3/1 interest-only ARM for $100,000, monthly payments, 30-year term. The initial contract rate is 4.00% and the contract rate for year 4 is 6.50%. What is the balance of the loan at the end of year 4? 94,892.15 98,591.88 96,483.13 95,347.22Suppose that you obtain a 100.000 TL loan from a bank. The maturity is 10 years and the annual interest rate is 10%. You will pay monthly installments. However, according to the loan agreement you will make no payments for the first three years. What would be the monthly payment amount? 830,06 TL 660,75 TL O 1.104,81 TL 879,46 TL O Diğer: What would be the annual interest rate for a 5.000.000 TL bank loan that requires 125.000 TL of total interest payment for a period of 4 months? O 7% 7,5% 8% 8,5% O Diğer:
