A bank has made a three-year $10 million loan that pays annual interest of 8 percent....
A bank has made a three-year $10 million loan that pays annual
interest of 8 percent. The principal is due at the end of the third
year.
a. The bank is willing to sell this loan with recourse at an
interest rate of 8.5 percent. What price should it receive for this
loan?
b. The bank also has the option to sell this loan without recourse at a discount rat of 8.75 percent. What should it expect for selling this loan?
How to solve this question on excel?
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