Homework Answers
Nominal Rate does not include any compounding and inflation into account thus it is basically it means in "name only". and can be computed as:
r= (Interest rate per period)(number of periods)
r= 2% * 12
r= 24%
thus the Nominal interest rate per year would be 24%
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Required information The Premier Car Title Loan Company makes emergency loans of up to $500 for...
Problem 1.7 (15 points) A loan shop in town offers emergency loans of up to $600...
Problem 1.7 (15 points) A loan shop in town offers emergency loans of up to $600 for 1 month. The shop charges a 5% fee of the amount for the 1-month period. If a person borrows $600 for one month, what is: a) (8 points) the nominal interest rate per year? b) (7 points) the effective rate per year?
Problem 3 (Required, 25 marks) Recently, Mr. A has 2 outstanding loans: • Loan A -...
Problem 3 (Required, 25 marks) Recently, Mr. A has 2 outstanding loans: • Loan A - He needs to repay $1720 at the end of every month and there are 36 repayments remaining. The loan charges interest at an annual nominal interest rate 12% compounded monthly Loan B - He needs to repay an amount X at the end of every month and there are 36 repayments remaining. The loan charges interest at an annual nominal interest rate 18% compounded...
1. Why are rates on credit card loans generally higher than rates on car loans? 2....
1. Why are rates on credit card loans generally higher than rates on car loans? 2. Metrobank offers one-year loans with a 6.5 percent stated or base rate, charges a 0.35 percent loan origination fee, imposes an 18 percent compensating balance requirement, and must pay an 12 percent reserve requirement to the Federal Reserve. The loans typically are repaid at maturity. a) If the risk premium for a given customer is 2.25 percent, what is the simple promised interest return...
al. If the loan requires being A company offers to loan $6,000 using a car title...
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A check cashing store is in the business of making personal loans to walk up customers the store makes only one week loans at 7% interest per week what a PR must the store report to its customers? What EAR are the customers actually paying? Now suppose the store makes one week loans at 7% discount interest per week. What's the APR now? The EAR? The check cashing store also makes one month out on interest loans at 7% discount...
Discount loan. Up-Front Bank uses discount loans for all its customers who want one-year loans. Currently, the ban...
Discount loan. Up-Front Bank uses discount loans for all its
customers who want one-year loans. Currently, the bank is
providing one-year discount loans at 7.8%.
What is the effective annual rate on these loans? If you were
required to repay $250,000 at the end of the loan for one year,
how much would the bank have given you at the start of the
loan?
P15-5 (similar to) Assigned Media Discount loan. Up-Front Bank uses discount loans for all...
i need help answering 1-4! thanks The mathematics of loans 99 Guided Project 45: The mathematics...
i need help answering 1-4! thanks
The mathematics of loans 99 Guided Project 45: The mathematics of loans Topics and skills: Sequences and sums Between houses, cars, or education, most people will take out a loan at some time in their lives. In a typical loan situation, a person borrows an amount $B at a fixed interest rate with a fixed payback period. The borrower makes monthly payments until the loan balance (the amount that remains to be paid) is...
A bank customer takes out a loan of 500 with a 16% nominal interest rate convertible quarterly. The customer makes paym...
A bank customer takes out a loan of 500 with a 16% nominal interest rate convertible quarterly. The customer makes payments of 20 at the end of each quarter. Calculate the amount of principal in the fourth payment. There is not enough information to calculate the amount of principal.
it is important to understand the costs associated with loans. These include the principle amount, interest,...
it is important to understand the costs associated with loans. These include the principle amount, interest, "fees" and discounts: The principle about is the amount that you borrow (want/need) and will pay back. Interest is the periodic (daily/monthly/annual) amount charged to borrow/rent the money. The "fees" come in many varieties and include a fixed fee to borrow, transaction cost, other lender costs, other fees and penalties. Discounts are money the lender gives you for using their service. Examples: 1) When...
Your car loan requires payments of $300 a month for the first year and payments of...
Your car loan requires payments of $300 a month for the first year and payments of $500 per month the second year. The annual interest rate is 6%, and payments begin in one month. What is the present value of this two-year loan?
Problem 1.7 (15 points) A loan shop in town offers emergency loans of up to $600 for 1 month. The shop charges a 5% fee of the amount for the 1-month period. If a person borrows $600 for one month, what is: a) (8 points) the nominal interest rate per year? b) (7 points) the effective rate per year?
Problem 3 (Required, 25 marks) Recently, Mr. A has 2 outstanding loans: • Loan A - He needs to repay $1720 at the end of every month and there are 36 repayments remaining. The loan charges interest at an annual nominal interest rate 12% compounded monthly Loan B - He needs to repay an amount X at the end of every month and there are 36 repayments remaining. The loan charges interest at an annual nominal interest rate 18% compounded...
1. Why are rates on credit card loans generally higher than rates on car loans? 2. Metrobank offers one-year loans with a 6.5 percent stated or base rate, charges a 0.35 percent loan origination fee, imposes an 18 percent compensating balance requirement, and must pay an 12 percent reserve requirement to the Federal Reserve. The loans typically are repaid at maturity. a) If the risk premium for a given customer is 2.25 percent, what is the simple promised interest return...
al. If the loan requires being A company offers to loan $6,000 using a car title as collateral. If the loan paid back $7,500 in 3 months, what simple interest rate did the loan company earn? If the loan company made a similar $6,000 every 3 months for a year, how much total of the year? interest would they earn over the course Exercise 1.2.10. Bobby is buying a house from Ami for $15,000. To complete the sale of a...
Discount loan. Up-Front Bank uses discount loans for all its
customers who want one-year loans. Currently, the bank is
providing one-year discount loans at 7.8%.
What is the effective annual rate on these loans? If you were
required to repay $250,000 at the end of the loan for one year,
how much would the bank have given you at the start of the
loan?
P15-5 (similar to) Assigned Media Discount loan. Up-Front Bank uses discount loans for all...
i need help answering 1-4! thanks
The mathematics of loans 99 Guided Project 45: The mathematics of loans Topics and skills: Sequences and sums Between houses, cars, or education, most people will take out a loan at some time in their lives. In a typical loan situation, a person borrows an amount $B at a fixed interest rate with a fixed payback period. The borrower makes monthly payments until the loan balance (the amount that remains to be paid) is...
A bank customer takes out a loan of 500 with a 16% nominal interest rate convertible quarterly. The customer makes payments of 20 at the end of each quarter. Calculate the amount of principal in the fourth payment. There is not enough information to calculate the amount of principal.
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