Homework Answers
i. APR = 14.3453%
EAR = (1+ 1.1954%) 12 -1 = 15.3271%
| NPER | 48 | |
| FV | 0 | |
| PMT | 275 | |
| PV | 10000.000 | |
| Rate | 1.1954% | [Rate ( nper, pmt,-pv,fv)] |
| YTM | 14.3453% | [1.1954%*12] |
ii. EAR = 12.1104%
| NPER | 4 | |
| FV | 0 | |
| PMT | 3300 | |
| PV | 10000.000 | |
| Rate | 12.1104% | [Rate ( nper, pmt,-pv,fv)] |
EAR is lower for Little Bank's loan and hence should be accepted.
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