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Jamison Inc. needs to raise $500,000 for a nine-month term. Jamison's bank has offered to lend...
Kerry Corporation must pay $500,000 to its supplier. Kerry's bank has offered a 270-day simple interest loan with a quoted interest rate of 12 percent. The bank requires a 20 percent compensating balance requirement on business loans. If Kerry currently holds no funds at the lending bank, what is the loan's effective annual rate (rEAR)? In your computations, assume there are 360 days in a year.
Exercises #11 1. Xtra Corporation needs $50,000 for three months to finance its working capital. The company has arranged a short-term loan with a bank. The bank charges 8% annual interest rate with interest paid in advance. The bank also requires 5% of the borrowed amount as a compensating balance. Assume Xtra does not have money to serve as a compensating balance and pay interest upfront 1.1 How much Xtra have to borrow? 1.2 Find effective cost of bank loan...
Flashlights, Inc needs $500,000 to take a cash discount of 2/10, net 80 A 8 banker wll loan the money for 70 days at an interest cost of $7.500 a What is the annual rate on the bank loan? (Use 365 days in a year. Do not round intermediate celculetions. Round the final answer to 2 decimal places) b. How much would it cost (in percentage terms) if the firm did not take the cash discount, but paid the bill...
You borrow $500,000 to purchase a home. The bank charges an interest rate of 5.75 percent (APR) and the loan will be paid in equal monthly installments over 30 years. What is your monthly payment? What is the total interest paid over 30 years? How much interest is paid in the first payment? What is the effective interest rate (EAR) on the loan?
Question 4 Penn Inc. needs to borrow $250,000 for the next 6 months. The company has a line of credit with a bank that allows the company to borrow funds with an 9% interest rate subject to a 20% of loan compensating balance. Currently, Penn Inc. has no funds on deposit with the bank and will need the loan to cover the compensating balance as well as their other financing needs. What will be the annual percentage rate, or APR,...
A bank loan that charges interest at the rate of 1.5% per month would have an effective annual rate (EAR) ofand a) 12.65%:13.40% b) 13.35%:12.60% c) 16.68%:15.00% d) 19.56%:18.00% an APR of (O
Pern Inc. needs to borrow $250,000 for the next 6 months. The company has a line of credit with a bank that allows the company to borrow funds with an compensating balance. Currently, Penn Inc. has no funds on deposit with the bank and will need the loan to cover the compensating balance as well as their other financing needs. What will be the interest rate subject to a zooloan annual percentage rate, or APR for this financing interest is...
Crab State Bank has offered you a $500,000 5-year loan at an interest rate of 9.25 percent, requiring equal annual end-of-year payments that include both principal and interest on the unpaid balance. Develop an amortization schedule for this loan. Round your answers to the nearest dollar. Do not round intermediate calculations. End of Year Payment Interest (9.25%) Principal Reduction Balance Remaining 0 - - - $500,000 1 $ $ $ 2 3 ...
Lily Shinto Inc. needs to raise $1m. Lily Shinto has the choice between using a revolving credit agreement or a discount bank loan. Lily Shinto has negotiated a revolving credit agreement with bank A. The bank will loan Lily Shinto up to $1.2m at an annual interest rate of 6.5% and requires a 0.5% commitment fee on the unused portion of the credit agreement. Bank B offers a discount bank loan with an interest rate of 6.75%. The bank's standard...
Problem 2: The quarterly payment on a 15‐year construction loan is $1867.50. The loan’s interest rate is a 6.40% annual percentage rate (APR) and payments are end‐of‐quarter. (a) What is the builder’s loan amount? (b) What is the loan’s effective annual rate (EAR)? (c) What will the loan balance be immediately after the 39th payment is made?