The following three one-year "discount" loans are available to you:Loan A: $135.538 at a 5.0 percent discount rateLoan B: $125,538 at a 4.0 percent discount rateLoan C: $145,538 at a 4.5 percent discount rate(a)Determine the dollar amount of interest you would pay on each loan and indicate the amount of net proceeds each loan wouldprovide. (Round answers to O decimal place, eg. 5275.)InterestNet ProceedsLoan A%2424Loan B%24Loan C Calculate the percent interest rate or effective cost of each loan, (Round answers to 2 decimal places, eg. 52.75JLoan ALoan BLoan C

Present value = Loan/(1+discount rate)n Interest = Loan - present value Cost of loan =Interest/net…

Answered: Loan A: $135,538 at a 5.0 percent…

Loan A: $135,538 at a 5.0 percent discount rate Loan B: $125.538 at a 4.0 percent discount rate Loan C: $145,538 at a 4.5 percent discount rate

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter7: Using Consumer Loans

Section: Chapter Questions

Problem 5FPE

See similar textbooks

Related questions

Q: Note: Round all answers to the nearest cent when necessary. Calculate the amount financed, the…

A: The question is related to Principal amount , monthly , instalment and interest. Instalment =…

Q: Calculate the finance charge (in $), the finance charge per $100 (in $), and the annual percentage…

A: in this we have to calculate financial charges and we have to use given table.

Q: Note: Round all answers to the nearest cent when necessary. Calculate the amount financed, the…

A: Down payment =Purchase (Cash) Price * Downpayment % = 3200*20% = $ 640

Q: Evaluating alternative notesA borrower has two alternatives for a loan: (1) issue a $360,000,…

A: The financial position of the company can be arrived from the income statement prepared by the…

Q: An amount of P14,000 is borrowed at a discount rate of 10%, find the proceeds if the length of the…

A: Par value = P14000 Discount rate = 10% Period = 180 Days

Q: Calculate the monthly payment by using the loan amortization table: (Round your answer to the…

A: Annuity: An annuity is defined as a series of payments, whether received or made, that are equal and…

Q: Calculate the finance charge (in $) and the annual percentage rate for the installment loan by using…

A: Amount Financed = $18400 Monthly payment = $424.08

Q: NOP Co. has agreed to the following loan proposal by a bank: ▪ Stated interest rate of 10% on a…

A: Net proceeds refers to the left out amount after considering all expenses likes commission expenses,…

Q: 4. Consider the following financing information for a loan of $103,000: Item Value S103,000 2 years…

A: Interest rate refers to a proportion of interest charged by a lender on loan value to the receiver

Q: Compute the rate (in %) for the loan. Round answers to the nearest tenth of a percent; use ordinary…

A: Solution Rate (in %) for the loan = Interest / principal amount * 360/ days of loan

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

A: Effective annual interest rate is the interest rate which an investor expects in a year after taking…

Q: I= Interest or finance charges P = Principal amount borrowed R = Rate of interest (simple, add-on,…

A: final answers:- a $1800 b$327.77 c $2640 d $263.33 e $3800 f $230 calculation s:- a). Finance…

Q: Bank A offers a 272-day discounted loan at a simple discount rate of 12%. i. How much money would a…

A: Given, Simple discount rate = 12% Discounted loan days = 272

Q: Cash discount versus loan The Wood Connection decides to offer cash discounts to its regular credit…

A: The company also makes sales of goods and services on account to increase the sale. The company uses…

Q: Calculate the amount financed, the finance charge, and the total deferred payment price (in $) for…

A: The following table can be completed with the given data. Amount financed is total cost less down…

Q: The ordinary simple interest charged after 130 days on a loan of ₱ 10,200 is ₱575. Find the interest…

A: Simple interest is amount of interest charged on the loan amount borrowed. This type of interest…

Q: Find the finance charges on a 8.4 percent, 18-month, single-payment loan when interest is computed…

Q: Note: Round all answers to the nearest cent when necessary. Calculate the amount financed, the…

A: Solution:- a)Calculation of amount financed as follows:- =Purchase price - Down payment =$2,600 - $0…

Q: Purchase (Cash) Price Down Payment Amount Financed Monthly Payment Number of Paym

A: Given, Purchase (Cash) Price = $2,600 Monthly payment = $188.69 No. of payments = 18 Finance charge…

Q: A loan of $4100 is to be repaid in three equal installments due 110, 197, and 311 days respectively…

A: Loan amount = $4,100 Interest per anum = 6.89% Number of days in year = 365 Let the instalment…

Q: Calculate the finance charge (in $), the finance charge per $100 (in $), and the annual percentage…

A: AMOUNT FINANCED = $17.910 NO OF PAYMENT = 48 MONTHLY PAYMENT = $550.47 TOTAL PAYMENT = $550.47 x 48…

Q: Find the annual financing cost

A: Annual Financing Cost = (interest cost +commitment fee) / usable funds * 365 / time period of…

Q: Bank ZLY is charging customers a loan rate of 9.2% APR compounded monthly. What is the equivalent…

A: Equivalent Effective Annual rate= It refers to that interest rate which is actually earned on a…

Q: Calculate the finance charge (in $) and the annual percentage rate for the installment loan by using…

A: Given: Amount Financed - $18,500 Number of payments Payment = 72 Monthly payment = $426.08 APR = ?

Q: onsider a loan at 4.125% APR on 6 years for a $23,000 car a. Estimate the monthly payment (using…

A: Equated Monthly Installments are one part of the equally divided monthly outgoes to clear off an…

Q: First National Bank charges 7.5 percent compounded quarterly on its business loans. First United…

A: When comparing interest rate with different compounding period, effective annual rate is to be…

Q: Loan $ 26,000 Down Payment $ 5,000 Time 36 months Rate 11 % Monthly Payments?

A: Solution: Loan amount = $26,000 Time = 36 months Annual rate of interest = 11%

Q: Note: Round all answers to the nearest cent when necessary. Calculate the amount financed, the…

A: Installment is the amount of periodic payments a borrower pay's to the lender in order to pay back…

Q: Compute the rate (in %) for the loan. Round answers to the nearest tenth of a percent; use ordinary…

A: We need to use ordinary interest formula to solve this problem Simple/ordinary interest…

Q: Compute the rate (in %) for the loan. Round answers to the nearest tenth of a percent; use ordinary…

A: Given, Interest = $25,650 Principal = $135,000

Q: Note: Round all answers to the nearest cent when necessary. Calculate the amount financed, the…

A: Loan is to be paid every month in installment and that installment will include both principal and…

Q: Calculate the finance charge (in $) and the annual percentage rate for the installment loan by using…

A: The finance charge is that charge which is paid by the borrower on the amount borrowed.

Q: Calculate the interest (in $), purchase price (in $), and effective interest rate (as a %) of the…

A: A treasury bill is a debt security issued by a government to raise borrow money. It is a money…

Q: alculate the finance charge (in $) and the annual percentage rate for the installment loan by using…

A: Therefore, the finance charge is $12,334.

Q: What is the annual percentage rate on a loan with a stated rate of 2 percent per quarter? A. 2.00…

A: In the given question we require to calculate the annual percentage rate on a loan if the stated…

Q: A three-year bank CD paying 7.16 percent compounded quarterly. Calculate effective annual interest…

A: EAR =1+rmm-1 WHERE, r= rate of interest m= frequency of compounding

Q: Note: Round all answers to the nearest cent when necessary. Calculate the amount financed, the…

A: Total deferred payment price is equal to the sum of down payment and total payments to be made.

Q: Note: Round all answers to the nearest cent when necessary. Calculate the amount financed, the…

A: A finance charge is an interest payment that is over & above the principal payment.

Q: Find the discount interest for a 2-year PHP 102,000 loan if the discount interest rate is 1.8%

A: Mortgage/ Borrowings: Borrowings are the loan which is taken by the individual to meet its…

Q: Round all answers to the nearest cent when necessary. Calculate the amount financed, the finance…

A: Purchase Price = $2,600 Down payment = $0 Monthly Payment = $189.69 Number of payments = 18

Q: Cash is borrowed on a 2-month note payable. If the interest cost to borrow is RO 400, and the cash…

A: The calculation of actual interest rate on the note is shown hereunder : Interest cost RO 400 Cash…

Q: first national bank charges 13.8 percent compounded monthly on its business loans. First United Bank…

A: Effective annual interest rate = (1 + (nominal rate / number of compounding periods)) ^ (number of…

Q: Find the amount of interest (in $) on a loan of $6,000, at 5% interest, for 60 days using the exact…

A: Exact interest rate is basically the method in which exact number of days are taken to calculate the…

Q: Note: Round all answers to the nearest cent when necessary. Calculate the amount financed, the…

A: Amount Financed = Cash Price - Down Payment Finance Charge = Total of Installments Amount - Amount…

Q: A man loans $4,000 at one interest rate and $5,000 at a 1% greater rate. The $5,000 loan earns $110…

A: Let the interest rate for $4000 = r Interest rate for $5000 = r + 0.01

Q: Note: Round all answers to the nearest cent when necessary. Calculate the amount financed, the…

A: 1) Amount Financed = Purchase Price - Down Payment Down Payment = $3,400*20% = $680 Amount…

Q: Calculating the APR on simple interest and discount loans. Find the finance charges on a 6.5…

A: Computation of Interest for 18 months is as follows: Loan amount =$1000Rate =6.5%Interest for 18…

Q: Navy Bank requires borrowers to keep a 13 percent compensating balance. Gorman Jewels borrow…

A: Interest = amount borrowed x rate of interest = $380000 x 6% = $22800

Question

The following three one-year "discount" loans are available to you:
Loan A: $135.538 at a 5.0 percent discount rate
Loan B: $125,538 at a 4.0 percent discount rate
Loan C: $145,538 at a 4.5 percent discount rate
(a)
Determine the dollar amount of interest you would pay on each loan and indicate the amount of net proceeds each loan would
provide. (Round answers to O decimal place, eg. 5275.)
Interest
Net Proceeds
Loan A
%24
24
Loan B
%24
Loan C

Calculate the percent interest rate or effective cost of each loan, (Round answers to 2 decimal places, eg. 52.75J
Loan A
Loan B
Loan C

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Calculating and comparing add-on and simple interest loans. Eli Nelson is borrowing 10,000 for five years at 7 percent. Payments, which are made on a monthly basis, are determined using the add-on method. a. How much total interest will Eli pay on the loan if it is held for the full five-year term? b. What are Elis monthly payments? c. How much higher are the monthly payments under the add-on method than under the simple interest method?
Del Hawley, owner of Hawleys Hardware, is negotiating with First City Bank for a 1-year loan of 50,000. First City has offered Hawley the alternatives listed here. Calculate the effective annual interest rate for each alternative. Which alternative has the lowest effective annual interest rate? a. A 12% annual rate on a simple interest loan, with no compensating balance required and interest due at the end of the year b. A 9% annual rate on a simple interest loan, with a 20% compensating balance required and interest due at the end of the year c. An 8.75% annual rate on a discounted loan, with a 15% compensating balance d. Interest figured as 8% of the 50,000 amount, payable at the end of the year, but with the loan amount repayable in monthly installments during the year
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.)
Find the finance charges on a 5 percent, 18-month, $1,000, single-payment loan when interest is computed using the simple interest method. Round your answer to the nearest cent. $ Determine the APR in this case. Round your answer to two decimal places. % Find the finance charges on the same loan when interest is computed using the discount method. Round your answer to the nearest cent. $ Determine the APR in this case. Round your answer to two decimal places. %