Banks sometimes quote interest rates in the form of “add-on interest.” In this case, if a 1-year loan is quoted with an interest rate of 8.0% and you borrow $1,000, then you pay back $1,080. But you make these payments in monthly instalments of $108 each. a) What is the true APR on this loan? (want to learn via Excel) b) What is the effective annual rate on the loan?

Q: A bank offers a loan that will require you to pay 9% per annum with semi-annual compounding. Which…

A: Given rate,  9% semi annual compounding

Q: rescott Bank offers you a five-year loan for $69,000 at an annual interest rate of 8.5 percent. What…

A: The value of money changes with time. Therefore, the time value of money considers the worth of…

Q: Banks sometimes quote interest rates in the form of “add-on interest.” In this case, if a 1-year…

A: Annual percentage rate is the interest rate paid in a year on loan amount or on investment. It is…

Q: (a) Suppose a credit card company charges a monthly interest rate of 1.8%. What APR must the company…

A: APR stands for annual percentage rate. It is the rate at which the lender charges the borrower.…

Q: A borrower can borrow $10 million at a fixed-rate loan at 7.5% for six years, or a floating-rate…

A: The borrower should select the lowest rate alternative among the fixed rate and floating rate plus…

Q: Elliott Credit Corp. wants to earn an effective annual return on its consumer loans of 17.1 percent…

A:

Q: Suppose you have received a credit card offerfrom a bank that charges interest at 1.4% per…

A: Working note:

Q: What is the annual interest rate if a simple interest loan of $10,000 for 4 years charges a total of…

A: When interest rate is simple interest: Interest = Principal*time*rate time and rate should be of…

Q: Straight bank loan. Right Bank offers EAR loans of 9.07% and requires a monthly payment on all…

A: Using excel PMT function to calculate monthly payment

Q: Straight bank loan. Right Bank offers EAR loans of 9.44% and requires a monthly payment on all…

A: The amount of loan repayment which is required to be paid on a monthly basis is known as monthly…

Q: Straight bank loan. Right Bank offers EAR loans of 8.74% and requires a monthly payment on all…

A: Monthly payment formula: PMT = principal ×aprm1-1+aprm-m×n where, m = frequency of compounding n =…

Q: You are offered an add-on loan for $4,500 at 18% for 5 years. What is the monthly payment? What is…

A: Hello, I am only answering first question as per the policy and if you want others to be answered…

Q: Flat Rock Inc recently borrowed $55,000 from its bank at a simple interest rate of 9.2%. The loan is…

A: The loan agreement that states the interest amount would be added back to the amount borrowed, such…

Q: Come and Go Bank offers your firm a discount Interest loan with an interest rate of 10 percent for…

A: Effective annual interest rate(ear) is the actual rate of return that is earned/ paid on loan…

Q: Suppose you are considering taking consumer loan from bank for one year. Usually, for short-term…

A: When loan is taken from the bank, interest is charged on it. Interest can be charged by bank…

Q: Banks sometimes quote interest rates in the form of “add-on interest.” In this case, if a 1-year…

A: Annual percentage rate (APR) refers to the annual cost of funds borrowed. The APR is usually…

Q: Consider a five-year floating rate loan with principal of $10 million and quarterly payments based…

A: Given information: 5 year floating rate loan of $10 million

Q: A lender requires PMI that is 0.8% of the loan amount of $470,000. How much (in dollars) will this…

A: Working note:

Q: What is the effective annual rate (EAR or EFF%)?  What is the EFF% for a nominal rate of 5%,…

A: Because you have posted multiple questions, we will answer only the first question and if you want…

Q: Banks sometimes quote interest rates in the form of “add-on interest.” In this case, if a 1-year…

A: Loan Amount  = $1,000 Monthly payment = $108 Time Period = 12 months

Q: According to a Jan. 19, 2015 article in the New York Times, a typical payday loan for $500 is paid…

A: The concept of TVM states that money inherently has interest-earning capacity because of which an…

Q: If you take out a loan for a new $20,000 car, a typical APR with a fair credit score is 4.8%. If you…

A: Solution:- We know,  Equal monthly installment =  { Loan amount x r x [ (1+r)n / (1+r)n -1] where r…

Q: You borrow $1,000 from a bank at 6% annual interest and promise to pay it back after a year. As you…

A: the real interest rate equals the nominal interest rate minus the expected inflation rate.…

Q: Suppose you are considering taking consumer loan from bank for one year. Usually, for short-term…

A: Hello. Since your question has multiple parts, we will solve the first question for you. If you want…

Q: What effective annual rate (EAR) are they charging us on the loan?

A: Effective Annual Rate: It refers to the true annual rate on a loan/credit or on investment since it…

Q: Straight bank loan. Left Bank has a standing rate of 7.9% (APR) for all bank loans and requires…

A: As you have posted multiple questions, we will solve the first question for you. To get remaining…

Q: A local finance company quotes a 12 percent interest rate on one-year loans. So, if you borrow…

A: The legally quoted rate represents the true cost of borrowing the loan. Effective Annual Rate is the…

Q: Suppose you take out a $37,000 4-year balloon loan from a bank at an interest rate of 9.8%. What…

A: Balloon payment is future value of payment considering the interest rate and period.

Q: Elliott Credit Corp. wants to earn an effective annual return on its consumer loans of 14.5 percent…

A: The formula used as follows: APR=m×1+EAR1m-1

Q: Discount loan. Up-Front Bank uses discount loans for all its customers who want one-year loans.…

A: Interest on discount rate = 8.5%  Repayment Amount = $225,000 The initial amount will be equal to…

Q: Someone is borrowing from a five-six ( Bumbay ) money lender. How much will   be charged if you want…

A: Interest is referred to as the monetary charge which is to be paid to the moneylender on the…

Q: set with a 5% annual payment cap. On the reset date, the composite rate is 6% (at the end of year…

A: Mortgage Loan = $393000 Tenure = 30 years i,e360 months  Teaser Rate of Interest = 4 %pa  (for 2…

Q: A bank is currently offering a savings account paying an interest rate of 6.0 percent compounded…

A: Equivalent annual rate: It is an annual rate of interest whether compounded monthly, quarterly, or…

Q: Bank Beta offers a car loan at 16.25% APR, compounded quarterly. What is the Effective Annual Rate…

A: Honor code: Hi, there, Thanks for posting the question. As per our Q&A honor code, we must…

Q: Use the information below for the next two problems.        Schlitz Inc. has obtained a 90-day bank…

A: Given:   Loan amount  $10,000 Annual Interest Rate 15% Loan period in days 90 Number of days…

Q: Elliott Credit Corp. wants to earn an effective annual return on its consumer loans of 14.2 percent…

A: given, EAR= 14.2%M = 365

Q: A bank makes a loan with the following characteristics: monthly payments for 10 years, with an APR…

A: PV: It is the current worth of cash flows that are expected to happen in the future.

Q: You are looking at a one-year loan of $20,000. The interest rate is quoted as 10 percent plus 2…

A: To calculate the actual rate first we need to calculate the  net amount of loan .   Net amount of…

Q: Straight bank loan. Right Bank offers EAR loans of 8.65% and requires a monthly payment on all…

A: APR is an abbreviation for Annual Percentage rate which refers to the interest rate or finance rate…

Q: Some banks now have biweekly mortgages (that is, with payments every other week). Compare a 20-year,…

A: Here, Mortgage Amount is $150,000 Time Period of loan is 20 years Interest Rate is 6.9% Note: The…

Q: Suppose you have received a credit card offer from a bank that charges interest at 1.1% per quarter,…

A: The nominal rate is the rate that the financial institution quotes when giving out or receiving…

Q: Suppose that you obtain a 100.000 TL loan from a bank. The maturity is 10 years and the annual…

A: P= 100,000 (Principal Amount) T= 10 years (Maturity Period) R= 10% (Annual interest rate)   S.I.…

Q: A payday loan is structured to obscure the true interest rate you are paying. For example, in…

A: “Since you have asked multiple question, we will solve the first question for you. If youwant any…

Q: Suppose you are considering taking consumer loan from bank for one year. Usually, for short-term…

A: Given: