You approach your local bank for a loan. The bank quotes a rate of 5.89% with...
You approach your local bank for a loan. The bank quotes a rate of 5.89% with an effective annual rate of 6%. Does the bank use annual, quarterly, or monthly compounding?
Homework Answers
If the rate is quarterly compounded, then the effective rate is:-
=(1+5.89%/4)^4-1
=6.02%
If monthly compounding, it is 6.05%, in annual, it will be the same as APR 5.89%
Thus the closest to 6% is 6.02%, hence the answer is quarterly.
Add Answer to:
You approach your local bank for a loan. The bank quotes a rate
of 5.89% with...
1. You are shopping for a loan, and a bank quotes you a rate of 6%...
1. You are shopping for a loan, and a bank quotes you a rate of 6% (expressedas an APR with continuous compounding). The loan amount is $100,000 and requiresmonthly interest payments. The loan principal will not be paid until the loan maturityin 10 years. What would be the monthly interest payment that you would have tomake on this loan? 2. A few days ago, you entered into 5 futures contracts to buy a stock index at $3,323. Your initial margin...
Bank One is offering a loan at a 9% nominal rate of interest, with quarterly compounding....
Bank One is offering a loan at a 9% nominal rate of interest, with quarterly compounding. Bank Two is offering an 8.7% nominal rate of interest with monthly compounding. What is the effective rate of interest for each of these loans? Which loan provides a better return?
A bank quotes you an interest rate of 12% per annum with monthly compounding. What is...
A bank quotes you an interest rate of 12% per annum with monthly compounding. What is the equivalent rate with continuous compounding?
A bank quotes you an interest rate of 12% per annum with monthly compounding. What is...
A bank quotes you an interest rate of 12% per annum with monthly compounding. What is the equivalent rate with continuous compounding? 12.22% 11.94% 11.85% 12.12%
You want to borrow £98,000 from your local bank to buy a new yacht. You can...
You want to borrow £98,000 from your local bank to buy a new yacht. You can afford to make monthly payments of £2,000, but no more. Assuming monthly compounding, what is the highest rate you can afford on a 60-month loan?
If a bank pays a 6% annual percentage rate, with quarterly compounding, on deposits, what effective...
If a bank pays a 6% annual percentage rate, with quarterly compounding, on deposits, what effective annual rate does the bank pay?
Bank 1 qoutes an annual rate of 11.2 % with monthlly compounding. Bank 2 uses semiannual...
Bank 1 qoutes an annual rate of 11.2 % with monthlly compounding. Bank 2 uses semiannual compounding and quotes an annual rate of 11.4 % Requirement 1: Calculate the effective annual interest rate for each bank. (Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16).) EAR Bank 1 % Bank 2 % Thank you!!
You want to borrow $69,000 from your local bank to buy a new car. You can...
You want to borrow $69,000 from your local bank to buy a new car. You can afford to make monthly payments of $1,200, but no more. Assuming monthly compounding, what is the highest rate you can afford on a 78 month APR loan? Please show all work and calculations.
You want to borrow $100,000 from your local bank to buy a new sailboat. You can...
You want to borrow $100,000 from your local bank to buy a new sailboat. You can afford to make monthly payments of $1,750, but no more. Assuming monthly compounding, what is the highest rate you can afford on a 72-month APR loan? Please show steps for full credit
You want to buy a car, and a local bank will lend you $25,000. The loan...
You want to buy a car, and a local bank will lend you $25,000. The loan would be fully amortized over 4 years (48 months), and the nominal interest rate would be 6%, with interest paid monthly. What is the monthly loan payment? Round your answer to the nearest cent. What is the loan's EFF%? Round your answer to two decimal places.
Bank One is offering a loan at a 9% nominal rate of interest, with quarterly compounding. Bank Two is offering an 8.7% nominal rate of interest with monthly compounding. What is the effective rate of interest for each of these loans? Which loan provides a better return?
Most questions answered within 3 hours.
-
a) Draw two water molecules.
b) Clearly name and label the type of bond that exists...
asked 39 minutes ago -
C - Language
Write a loop that sets each array element to the sum of itself...
asked 1 hour ago -
(63
#14)
which of the following statments best describes how chamging
the concentration of the substances...
asked 5 hours ago -
In the following reaction, which element is undergoing
oxidation: Na2SO3 + N2O --> N2 + Na2SO4...
asked 6 hours ago -
Which of the following pairs of ions have the same electron
configuration?
I: Br− and Se2−...
asked 8 hours ago -
The Foremost Composite Materials Company is planning a two-day
sales conference for October 19-20. The conference...
asked 9 hours ago -
3) Illustrate the observed pattern of relatedness of organisms
versus adaptations to specific conditions. This means...
asked 9 hours ago -
In winter a lake has a 0.35 m thick ice layer over 1.10 m of
water....
asked 10 hours ago -
Assuming the following has been encrypted with a Vigenere cipher
below, use the method(s) and assumptions...
asked 10 hours ago -
How would I use switch statements to write a program that will
take an input of...
asked 10 hours ago -
Imagine a reaction in which methane gas combusts at a constant
pressure of 1 atm and...
asked 10 hours ago -
Two parallel wires (each 12 m in length) are separated by a
distance of 0.065 m...
asked 10 hours ago