Suppose you borrow from a bank $1,997.26 today (t=0). You agree to pay back $3,943.65 in...

Suppose you borrow from a bank $1,997.26 today (t=0). You agree to pay back $3,943.65 in 5 years (t=5). The interest rate (%) that the bank charge you is closest to ________%. Input your answer without the % sign and round your answer to two decimal places.

Solutions

Expert Solution

Interest rate = (CF5/CF0)^(1/n) - 1

Interest rate = (3,943.65/1,997.26)^(1/5) - 1

Interest rate = 1.9745301062^(1/5) - 1

Interest rate = 1.145757614 - 1

Interest rate = 0.145757614

Interest rate = 14.5757614%

Interest rate = 14.58%

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

Suppose you borrow from a bank $2,014.61 today (t=0). You agree to pay back $4,518.71 in 7 years (t=7)

Suppose you borrow from a bank $2,014.61 today (t=0). You agree to pay back $4,518.71 in 7 years (t=7). The interest rate (%) that the bank charge you is closest to ________%

You borrow $10,000 and agree to pay back $12,000 in 3 years.What is the annual...

You borrow $10,000 and agree to pay back $12,000 in 3 years. What is the annual interest rate you're being charged?

LOAN AMORTIZATION. Today is T=0. You borrow $250,000 today at a rate of interest of 8%....

LOAN AMORTIZATION. Today is T=0. You borrow $250,000 today at a rate of interest of 8%. You agree to repay the loan over five years. Assuming a 40% tax rate, what are the tax implications, annually, if you repay the loan as a Zero amortization schedule Full amortization schedule Partial amortization schedule ($100,000 extra balloon payment at T=5

A project will cost $1,000 today and will pay back $100 one year from today (t=1),...

A project will cost $1,000 today and will pay back $100 one year from today (t=1), $200 two years from today (t=2), $500 three years from today (t=3) and $1,000 four years from today (t=4). If the required rate of return is 7%, answer question Q1 to Q5. Q1: What is the present value of the future cashflow? a)1578.62 b)1439.19 c)1374.25 d)1664.83 Q2: What is the NPV of the project a)439.19 b)1439.19 c)578.62 d)1374.25 Q3: What is the IRR of...

Suppose that you borrow $10,000 today from Falcon Savings & Loan (S&L) and promise to pay...

Suppose that you borrow $10,000 today from Falcon Savings & Loan (S&L) and promise to pay this loan back in 6 years with a total payment (principal plus interest) of $14,500. What is the effective annual interest rate that the S&L is charging? Assume monthly compounding. Do not round at intermediate steps in your calculation. Express your answer in percent. Round to two decimal places. Do not type the % symbol.

Suppose that you borrow $10,000 today from Falcon Savings & Loan (S&L) and promise to pay...

Suppose that you borrow $10,000 today from Falcon Savings & Loan (S&L) and promise to pay this loan back in 6 years with a total payment (principal plus interest) of $15,713. What is the effective annual interest rate that the S&L is charging? Assume monthly compounding. Do not round at intermediate steps in your calculation. Express your answer in percent. Round to two decimal places. Do not type the % symbol.

Your friend wants to borrow $2,500 and pay you back the $2,500 in a year from...

Your friend wants to borrow $2,500 and pay you back the $2,500 in a year from now. You agree to the loan but tell your friend he must pay you $500 up-front. a) What is the annual effffective rate of interest you have charged your friend? b) Before your friend agrees to the deal, he gets a letter in the mail saying he qualifified for a a credit card from McMaster Bank with a $2,500 limit which charges an annual...

You plan to borrow $40,000 from the bank to pay for inventories for a gift shop...

You plan to borrow $40,000 from the bank to pay for inventories for a gift shop you have just opened. The bank offers to lend you the money at 14 percent annual interest for the 3 months the funds will be needed (assume a360-day year). a. Calculate the annualized rate of interest on the loan. b. In addition, the bank requires you to maintain a 15 percent compensating balance in the bank. Because you are just opening your business, you...

You plan to borrow $10,000 from the bank to pay for inventories for a gift shop...

You plan to borrow $10,000 from the bank to pay for inventories for a gift shop you have just opened. The bank offers to lend you the money at 8 percent annual interest for the 3 months the funds will be needed (assume a 360-day year). a. Calculate the annualized rate of interest on the loan. b. In addition, the bank requires you to maintain a 14 percent compensating balance in the bank. Because you are just opening your business,...

You plan to borrow $50000 from the bank to pay for inventories for a gift shop...

You plan to borrow $50000 from the bank to pay for inventories for a gift shop you have just opened. The bank offers to lend you the money at 9 percent annual interest for the 3 months the funds will be needed (assume a 360-day year). a. Calculate the annualized rate of interest on the loan. b. In addition, the bank requires you to maintain a 20 percent compensating balance in the bank. Because you are just opening your business,...

Subjects