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NOTE FOR QUESTION 9: In a discount interest loan, the interest is deducted from the amount...
NOTE FOR QUESTION 9: In a discount interest loan, the interest is deducted from the amount the borrower receives at the beginning of the loan. For example, if a bank makes a one-year loan of $10,000 at a simple interest rate of 5%, the borrower essentially borrows $9,500 at the beginning of the year and repays it with no interest at the end of the year.
9.A bank offers your firm a discount interest loan at 8.25 percent for up to $25 million and, in addition, it requires your firm to maintain a 5 percent compensating balance against the amount borrowed. What is the effective annual interest rate on this lending arrangement? (SHOW YOUR WORK)
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ekkarill92 answered 2 years agoRelated Solutions
The total amount of interest that will be paid on a four-month, $6,500, 9% note payable...
The total amount of interest that will be paid on a four-month,
$6,500, 9% note payable equals:
Multiple Choice
$585.
$292.
$146.
$195.
This question illustrates what is known as discount interest. Imagine you are discussing a loan with...
This question illustrates what is known as discount
interest. Imagine you are discussing a loan with a somewhat
unscrupulous lender. You want to borrow $30,000 for one year. The
interest rate is 19.75 percent. You and the lender agree that the
interest on the loan will be .1975 × $30,000 = $5,925. So, the
lender deducts this interest amount from the loan up front and
gives you $24,075. In this case, we say that the discount is
$5,925.
What is...
This question illustrates what is known as discount interest. Imagine you are discussing a loan with...
This question illustrates what is known as discount interest.
Imagine you are discussing a loan with a somewhat unscrupulous
lender. You want to borrow $18,000 for one year. The interest rate
is 16.75 percent. You and the lender agree that the interest on the
loan will be .1675 × $18,000 = $3,015. So, the lender deducts this
interest amount from the loan up front and gives you $14,985. In
this case, we say that the discount is $3,015. What is...
Question 5 (11 marks) [Note this question is from the Week 9 Tutorial] a) In Chapter...
Question 5 [Note this question is from the Week 9
Tutorial] a) In Chapter 9 (Week 9 Tutorial) we discussed the
integration of the Human Resource Management and Payroll databases.
In particular, we discussed different benefits of this integration
in the Week 9 Tutorials. Some companies believe in the integration
of HRM and Payroll systems. However, many firms do not agree with
this integration. These companies maintain separate HRM information
systems and Payroll. Required: Discuss both arguments. For this
discussion,...
Question 5 (11 marks) (Note this question is from the Week 9 Tutorial) As a small...
Question 5 (Note this question is from the Week 9
Tutorial) As a small software developer firm, you have approached
the AXZ Bank to obtain a term loan so that the firm can purchase a
new server. The AXZ bank provides two (2) offers to your company,
as listed below: a) a loan of $100,000 over a five (5) year period
at an interest rate of 7.65% per annum (per year) payable at the
end of each month. b) a...
The following loan is fully amortizing. The loan is for $13,000 at 9% interest to be...
The following loan is fully amortizing. The loan is for $13,000
at 9% interest to be repaid over three (3) years.
Amortize this loan on a monthly basis.
Calculate the interest portion of the fourth (4th)
payment considering that an additional payment of $2,000
was made with the second payment.
Below market interest note On January 1, Investor purchased a 9 year, $400,000; 4% note from...
Below market interest note
On January 1, Investor purchased a 9 year, $400,000; 4% note
from Borrower. The yield
(market interest rate) at the time of issuance was 9%,
compounded annually.
For Investor:
Record the journal necessary on January 1
2. Record the journal entry necessary on December 31.
(Assuming no additional entries were made since January 1)
3.Record the journal necessary on the
following January 1.
For Borrower:
4. Record the journal necessary on January 1.
5. Record the...
FINANCIAL MATH QUESTION 1 The loan of $ 20,000, received at 9% annual interest, is repaid...
FINANCIAL MATH
QUESTION 1
The loan of $ 20,000, received at 9% annual interest, is repaid
as follows:
(a) after 2 months $ 5,000,
(b) after 5 months, the amount X,
(c) after 9 months $ 8,000.
How much to pay after 5 months? Interest is calculated on the
balance of the debt. Time calculation method
"30/360".
Explain the differences between a pure discount loan, an interest-only loan, and a level-payment amortized loan....
Explain the differences between a pure discount loan, an
interest-only loan, and a level-payment amortized loan.
Explain interest rate risk.
What are the three elements in every time value of money
calculation?
In a bank reconciliation, interest revenue earned on a chequing account would be deducted from the...
In a bank reconciliation, interest revenue earned on a chequing
account would be deducted from the book balance.
true or false
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