Don’t Trust the Quoted Rate - three examples I need concepts of Borrowing from a bank:...

Don’t Trust the Quoted Rate - three examples

I need concepts of

Borrowing from a bank:

Montly versus Annual Interest

an Interest Free Loan

Expert Solution

Borrowing from a bank is the process of getting funds for your personal or business requirement. As an individual there are different types of bank borrowings e.g education loan, home loan, car loan, personal loan, mortgage loan etc. Then there is business loan for carrying out business activites. All the borrowings from bank bear a Rate of Interest at which funds are lent to you and the repayment of the borrowing has to be done on Equated Monthly Instalments or Instalments (frequency may be monthly, quarterly or annually as per loan covenants).

E.g I am a government employee with fixed monthly incoem of Rs 70,000/- I need to purchase flat for Rs 45 lacs. I can borrow from bank at ROI of 8% with repayment period of 300 (present age 26) and EMI of Rs 32000/-. Thus I will be able to build an asset for myself and my family by borrowing and repaying systematically from a bank.

2.

Monthly Interest	Annual Interest
Here bank borrowing is repaid in Rate of Interest compunded monthly to Equated Monthly Interest	Here bank borrowing is repaid with annual compunding of ROI.
This may also mean the applicable ROI for bank borrowing is monthly rat of interest	Annual rate of interest
E.g Business loans have monthly ROI also.	E.g home loans generaly have annual ROI

3. An interest free loan is not a loan but an advance which you take back in pre decided instalments. There is no interest component to this loan and thus you only repay the principle amount you have borrowed. There is no profit for the lender in such loans since there is no value addition to the loan amount.

E.g many company's give their employee an interest free loan cum advance beggining of each financial year whcih are then systematiclly deducted from their salaries and the loan gets repaid by the end of that financial year.

jeff jeffy answered 2 years ago

William puts $8,000 in the bank today. The quoted interest rate is 8%, and the bank...

William puts $8,000 in the bank today. The quoted interest rate is 8%, and the bank compounds interest quarterly. If William makes no further deposits, how much will he have at the end of 9 years? (to the nearest dollar) a. $13,760 b. $16,319 c. $10,146 d. $15,992 Please show the process

Solve each of the following three problems, all of which involve borrowing money from a bank...

Solve each of the following three problems, all of which involve borrowing money from a bank with an APR of 6.5% compounded annually. Look carefully at how the problems differ from one another, in spite of appearing similar. In your solutions, say a few words explaining how you can tell which is the appropriate formula to apply in each case. a. Suppose that you borrow $1000 once per year, beginning today, and ending 10 years from now (so you borrow...

Goals: Concepts related to conditional statements in Python. This is a Python program. You DON’T need...

Goals: Concepts related to conditional statements in Python. This is a Python program. You DON’T need loops for this. Below is the programming task. An employee is paid at a rate of $17.25 per hour for up to 40 regular hours worked in a week. If the employee works more than 40 hours, it is considered overtime. Any hours over 40 hours but less than or equal to 60 are paid at the overtime rate ($12.34 per hour). Any hours...

A bank has the following transactions with another BBB-rated bank: (i) A three-year interest rate swap...

A bank has the following transactions with another BBB-rated bank: (i) A three-year interest rate swap with a principal of $80 million that is worth $2 million. (ii) A two-year foreign exchange forward contract with a principal of $120 million that is worth –$4 million. (iii) A long position in a seven-year option on silver (i.e. precious metal other than gold) with a principal of $40 million that is worth $6 million. (a) What is the capital requirement under Basel...

1. If your bank quoted a 6% interest rate on your account, which is compounded monthly,...

1. If your bank quoted a 6% interest rate on your account, which is compounded monthly, which of the following implications is correct? a. The semi-annual interest on your account is 3% b. The monthly interest on your account is 0.5% c. Your effective annual interest rate on this account is 6% d. Your effective annual interest rate on this account is below 6% 2. The interest amount of an interest-only loan is ______. a. repaid in full at the...

(**I would like Australian examples please. Please provide examples from Australia .) You need to demonstrate...

(**I would like Australian examples please. Please provide examples from Australia .) You need to demonstrate that you can use statistical data to interpret market trends and developments. (**I would like Australian examples please. Please provide examples from Australia .) For a specific organisation you must: (Provide example from Australia) Develop a research plan that will enable you to gather both quantitative and qualitative data about internal and external conditions that affect the market and your organisation’s product/ service positioning...

I need 5 groups examples of in-groups.

41. Small companies typically prefer ____________ to borrowing from a bank because it is a source...

41. Small companies typically prefer ____________ to borrowing from a bank because it is a source of funding where the company is not obligated to _____________________. A) issuing bonds; to proceed with an IPO B) an IPO; issue bonds C) an IPO; make interest payments D) issuing bonds; make interest payments

What will be the effects if People’s bank of China decides to lower the short-term borrowing rate by 0.5% to

What will be the effects if People’s bank of China decides to lower the short-term borrowing rate by 0.5% to(a) A corporate based in Shanghai?(b) A multinational corporation that have operations in both Beijing and Boston?(c) A corporate that only operates in Boston and have no operation or export in China?

Josh Hamilton is thinking about borrowing $15,000 from his bank. The bank could use add-on rates...

Josh Hamilton is thinking about borrowing $15,000 from his bank. The bank could use add-on rates of 4.5% for 3 years, 5% for 4 years, and 6% for 5 years. calculate the finance charge and monthly payment for these 3 options.

Question