INTEREST COST. Ajax Corporation is deciding which of two banks to borrow from on a 1-year basis. Bank A charges an 18 percent interest rate payable at maturity. Bank B charges a 17 percent interest rate on a discount basis. Which loạn is cheaper?

Q: A credit union's Rate-Climber GIC pays rates of 2%, 2.5%, and 3% compounded semiannually in…

A: Future value of a present value is the value of that amount after taking into account the time value…

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Q: pays a 9.75% nominal rate on deposits, with monthly compounding. What effective annual rate (EFF%)…

A: The effective annual rate can be computed as follows :- EAR = (1+i / x)^x - 1  = (1 + 0.0975/12)^12…

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.…

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A: Effective annual rate is the equivalent rate in comparison with the interest rate that is compounded…

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A: *Answer:  Data given: Loan amount                     =$214,296 Interest rate…

Q: Discount loan. Up-Front Bank is now offering a two-year discount loan for 9.8%. Working backwards,…

A: Loan is financial agreement where a person (lender) lends lump-sum money to other person (borrower)…

Q: On a $10,000 principal investment, a bank offered interest rates of 3.45% on 270- to 364-day GIC's…

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Q: Consider an FI with the following off-balance-sheet items: A two-year loan commitment with a face…

A: Credit equivalent amount is the total of all the items which comes under off-balance sheet exposure.…

Q: Bank  M offers the following terms for a $10 million loan: interest rate: 8 percent for one year on…

A: If the firm intends to borrow the $10 million for the entire year.For Bank M:Interest rate is 8 %.…

Q: onge Corporation must arrange financing for its working capital requirements for the coming year.…

A: Cost of Finance - This is the floating time allowed by the financier to the company to pay for goods…

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

A: APR is termed as the Annual Percentage Rate which is charged by any of the authorizing institutions…

Q: Find the APR of the loan given the amount of the loan the number and types of payment in the add-on…

A: Annual percentage rate (APR) : It refers to the yearly generated interest by a Principal amount that…

Q: Cumberland Furniture wishes to establish a prearranged borrowing agreement with its local commercial…

A: Effective annual rate represents the actual interest rate over a year for the company.

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: Uptown Bank has granted a line of credit of $80,000 with an interest rate of 7.5 percent and a…

A: Given information: Line of credit amount is $80,000 Interest rate is 7.5% Compensating balance…

Q: Which results in a lower total interest​ charge, borrowing ​$1,290 to be repaid 12 months later as…

A: Interest is an extra cost which is paid on the borrowed amount for the period. It increases the…

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: pital Corporation (CCC) is taking out a new 2-year bank loan for $100,000 at 6% interest (APR…

A: The given problem can be solved using EFFECT function in excel. EFFECT function computes effective…

Q: 5. If this loan had been made on a 10% add-on basis payable in 12 end-of-month installments, that…

A: The following calculations are done as per the information provided.

Q: A thrift has an annual CGAP of -$25 million. A credit union has an annual CGAP of +$5 million. The…

A: NII (Net Interest Income) refers to difference interest charged by financial institutions on lending…

Q: Data​ Back-Up Systems has obtained a $29,000, 90-day bank loan at an annual interest rate of 15​%,…

A: a)The computation of amount of interest on the loan is as follows:Working note:Hence, the amount of…

Q: Assume interest is paid in full at the end of each year. a. How much would Sauer Food Company save…

A: There is interest to be paid on the loan that depends on the period of loan and interest rate on the…

Q: Set Corporation is deciding which of two banks to borrow from on a 1-year basis. Bank A charges an…

A: Bank A interest rate = 18% Bank B discount rate = 17%

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: A local finance company quotes an interest rate of 16.7 percent on one-year loans. So, if you borrow…

A: Given  Loan amount = $25000 Interest = $4175pa Number of months = 12 months PMT = $2,431.25…

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: FINCORP has two debtors who each make a $10, 000 purchase. Debtor 1 pays their account in 10 days,…

A: For the purpose of increase the sales of the company, a scheme launched by the companies of credit…

Q: Utah Inc. would need cash of P5,000,000 for a period of 3 months f nk. The latter offered 12%…

A: Simple effective cost is overall cost of loan including the origination cost and interest.

Q: On a $10,000 principal investment, a bank offered interest rates of 3.45% on 270- to 364-day GIC's…

A: Principal Investment (P)=$10,000   Future value form the investment from a 364-days GIC…

Q: ABC is inclined to take a bank loan that has a face amount of P5,000,000, a term of 6 months,…

A: Generally, The loan is paid out off several Installments. Based on the credit history of borrower,…

Q: alculate the difference in the effective annual rates of interest offered by both banks if the…

A: Decision Making of Philander Limited with respect to Borrowing from Different Sources based on…

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A: Given:

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 can obtain a loan of $200000 at a rate of 15 percent for two years. You have a choice of (i)…

A: Loan amount  $ 2,00,000.00 Time Period 2 Interest Rate 15%

Q: ABC’s bank offered a loan with conditions of a P5,000,000 face amount, 6-month term, 4% interest…

A: The annual effective rate is the actual rate of interest which is implied on the principal amount.…

Q: The National Co. has a revolving line of credit of P300,000 with a one-year maturity. The terms call…

A: Annual cost of financing arrangement = Interest cost 7% on the average loan balance during the year…