5 - Exercise 2:a If you consider 6.25% as a nominal interest rate, find the corresponding effective rate per quartercompounded daily and continuously.Answerb- Based on these results, if you are a banker, which option you will offer to a customer who wish to set up asaving account (compounded daily or continuously interest rate). ExplainAnswer

If you consider 6.25% as a nominal interest rate, find the corresponding effective rate per quarter compounded daily and continuously. aswer Based on these results, if you are a banker, which option you will olfer to a customer who wish to set up a saving account (compounded daily or continuously interest rate). Explain

If you consider 6.25% as a nominal interest rate, find the corresponding effective rate per quarter compounded daily and continuously. aswer Based on these results, if you are a banker, which option you will olfer to a customer who wish to set up a saving account (compounded daily or continuously interest rate). Explain

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 31P

See similar textbooks

Similar questions

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?
If you borrow $9000 at an annual percentage rate (APR) of r (as a decimal) from a bank, and if you wish to pay off the loan in 3 years, then your monthly payment M (in dollars) can be calculated using: M = 9000 (er/12-1) / 1 - e-3r 1) Describe what M (0.035) would represent in terms of the loan, APR, and time. 2) If you are only able to afford a max monthly payment of $300, describe how you could use the above formula to figure out what the highest interest rate the bank could offer you and you would still be able to afford the monthly payments. In addition, determine the maximum interest rate that you could afford.
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. 1) What is the true APR on this loan? 2) What is the effective annual rate on the loan? Please show workings with formulas.
In a discount interest loan, you pay the interest payment up front. For example, if a 1-year loan is stated as $42,000 and the interest rate is 8.50%, the borrower “pays” 0.0850 × $42,000 = $3,570 immediately, thereby receiving net funds of $38,430 and repaying $42,000 in a year. a. What is the effective interest rate on this loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b. What is the effective annual rate on a 1-year loan with an interest rate quoted on a discount basis of 18.50%? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Assume that interest is the only finance charge. Use financial calculator to answer the questions.How much interest would be paid on a $8,000 installment loan to be repaid in 48 monthly installments of $210.72? Round the answer to 4 decimal places. % per monthWhat is the APR on this loan? Round the answer to 2 decimal places. %
You have recently seen a credit card advertisement that states that the annual percentage rate is 6.3 percent. If the credit card requires monthly payments, what is the effective annual rate of interest on the loan? (Round answer to 2 decimal places, e.g., 12.25.) Effective annual rate Type your answer here %
a.) You are charged 17.85% APR compounded monthly on your credit card. What are your monthly and annual effective interest rates? b.) What is the effective interest rate per quarter if the interest rate is 9% compounded monthly? Pls solve both questions otherwise I will give you definitely downvote
Use a calculator for this exercise.Chuong Ngo borrows $3000 from a bank that advertises a 7% simple interest rate and repays the loan in five equal monthly payments. Estimate the APR. Round to the nearest tenth of a percent. Use the Approximate Annual Percentage Rate Formula.
Assume you take out a car loan of $8,600 that calls for 48 monthly payments of $300 each. a. What is the APR of the loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Use a financial calculator or Excel.) b. What is the effective annual interest rate on the loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
What effective annual rate can a bank earn on an APR of 10.5 percent, compounded monthly? Can the excel and calculator solution be provided?
1. The bank officer is convincing a customer who is looking for a car loan. Compute the price the bank expects to receive for the loan if annual interest rate is 8%, the car payment is $350 per month, and the loan term is six years. You may convert the annual interest rate into monthly interest rate using the formula [monthly interest rate(im) = (1+i)1/12 – 1, where i is the annual interest rate].
Your bank is offering a term deposit that will earn investors an EAR of 10.70%. Your manager asks you to quote this as an APR with semi-annual compounding. What is the correct APR?