You plan to apply for a loan from Bank of America. The nominal annual interest rate...

You plan to apply for a loan from Bank of America. The nominal annual interest rate for this loan is 13.89 percent, compounded daily (with a 365-day year). What is the effective annual rate, or EAR (annual percentage yield), of this loan?

Expert Solution

jeff jeffy answered 2 years ago

Answer the following: A bank makes a loan at a 7.0% nominal interest rate to a...

Answer the following: A bank makes a loan at a 7.0% nominal interest rate to a business. For each of the following scenarios, calculated the expected and actual real interest rates on the loan and state whether the bank is better-off, worse-off, or just as well-off as it expected. Inflation was expected to be 4%, but actual inflation was 2% Inflation was expected to be 3%, but actual inflation was 3% Inflation was expected to be 2% and actual inflation...

A loan of 11000 is made with interest at a nominal annual rate of 12% compounded...

A loan of 11000 is made with interest at a nominal annual rate of 12% compounded monthly. The loan is to be repaid by 36 monthly payments of 367.21 over 37 months, starting one month after the loan is made, there being a payment at the end of every month but one. At the end of which month is the missing payment? For your reference, the answer is at the 17th month.

The U.S. nominal annual rate of interest is 3% and the European annual nominal rate of...

The U.S. nominal annual rate of interest is 3% and the European annual nominal rate of interest on the Euro is 2%. At the same time, the spot exchange rate is $1.20 per Euro and the real interest rate is 2% in both the U.S. and Europe. What is the one year forecast of the U.S. dollar (USD) per Euro spot exchange rate, assuming the international Fisher effect holds? Show work. What is the U.S. dollar (USD) per Euro one-year...

A bank lends a CHF 1’000’000 loan at an annual interest rate of 4% to a...

A bank lends a CHF 1’000’000 loan at an annual interest rate of 4% to a customer. The loan foresees a complete linear repayment over its term of 5 years. Debt servicing is made once a year in arrear. Calculate the installment payment and the interest payment at the end of the third year.

A loan is amortized over five years with monthly payments at an annual nominal interest rate...

A loan is amortized over five years with monthly payments at an annual nominal interest rate of 6% compounded monthly. The first payment is 1000 and is to be paid one month from the date of the loan. Each succeeding monthly payment will be 3% lower than the prior payment. Calculate the outstanding loan balance immediately after the 40th payment is made.

FIN220 Bank offers you a 5-year loan for 500,000 Baht at an annual interest rate of...

FIN220 Bank offers you a 5-year loan for 500,000 Baht at an annual interest rate of 5 percent, compounded monthly. What will your monthly loan payment be? 115,487.40 100,000.00 4,166.67 9,435.62

Red Sea Co. obtained a $200,000 loan from ANB bank at 6% annual interest rate that...

Red Sea Co. obtained a $200,000 loan from ANB bank at 6% annual interest rate that will be paid off in annual payments over ten years. How much will each annual payment be?

You have a $200,000.00 budget borrowed (Loan) from a bank, with an interest rate of 4.5%...

You have a $200,000.00 budget borrowed (Loan) from a bank, with an interest rate of 4.5% per annum. (Loan Date = January 1, 2018) Cars purchased must be ONLY New 2018 models, Ford, Chevrolet AND Dodge cars mixed from the Big 3 US Auto manufacturers. You can reinvest buying new cars from the profits you earn from the original rental car fleet fees; assume 80% of the vehicles will be rented at all times. Assume 1.5% product price increase each...

You borrowed from the bank $300,000 with an annual interest rate of 6% and a maturity...

You borrowed from the bank $300,000 with an annual interest rate of 6% and a maturity of 30 years. Determine the monthly mortgage payment.

You are given a loan with a nominal interest rate of 5%. You must pay back...

You are given a loan with a nominal interest rate of 5%. You must pay back this loan one year from now. Over the next year inflation is at 4%. In real terms what is the effective interest rate you must pay the loan back at after adjusting for inflation?

Question