financial management ch 18 hwplease show work, thank you.question 8 (Related to Checkpoint 18.3) (Calculating the cost of short-term financing) You plan to borrow $20,000 from the bank to pay for inventories for agift shop you have just opened. The bank offers to lend you the money at 10 percent annual interest for the 6 months the funds will be needed (assume a360-day year).a. Calculate the annualized rate of interest on the loan.b. In addition, the bank requires you to maintain a 15 percent compensating balance in the bank. Because you are just opening your business, you donot have a demand deposit account at the bank that can be used to meet the compensating-balance requirement. This means that you will have to put15 percent of the loan amount (which you had planned to use to help finance the business) in a checking account. What is the cost of the loan now?c. In addition to the compensating-balance requirement in part b, you are told that interest will be discounted. What is the annualized rate of interest onthe loan now?

Loans are any type pf financial credit facility in which a sum of money is lent by one party to…

Answered: (Related to Checkpoint 18.3)…

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

ChapterMB: Model-building Problems

Section: Chapter Questions

Problem 27M

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You go to the loan fund of the company where you work and find that they have an emergency fund whose regulations establish that the credits will be paid in monthly installments for 12 months, and that the installments 3,6,9 and 12 will be double the others. Likewise, the interest is 3 % per month. The amount that they will lend depends on the installment. a) If you are loaned $500,000, what will the normal payments be? b) If your regular payments are $10,000, what would be the value of the loan?
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Suppose you secure a home improvement loan in the amount of $5,000 from a local bank. The loan officer gives you the following loan terms:• Contract amount = $5,000• Contract period = 24 months• Annual percentage rate = 12%• Monthly installment = $235 .37Shown is the cash flow diagram for this loan. Construct the loan payment schedule by showing the remaining balance, interest payment, and principal payment at the end of each period over the life of the loan.
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A customer of your bank comes for a car loan 10000 OMR. He is charged with an interest rate of 5% per year. The customer expects a monthly repayment schedule from you, to plan his repayment. Provide a loan amortization schedule for monthly repayment of I year.
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You need to borrow $12,000 to buy a car, so you visit two banks and are given two alternatives. The first bank allows you to pay $2595.78 at the end of each year for six years. The first payment is to be made at the end of the first year. The second bank offers equal monthly loan payments of $198.87, starting at the end of first month. What are the interest rates that the banks are charging? Which alternative is more attractive?
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