The bank is offering you 9 APR on a loan. Currentlythe conditions are that the 9 APR is compoundedmonthly. Say the bank was open to changing thecompounding period to anything you would like....b) What is the BEST-case scenario for your ieff(annual) as far as you (the customer) is concerned?Type your response

Annual Percentage Rate = 9% Monthly Compounding Number of compounding periods = 12

Answered: The bank is offering you 9 APR on a…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 31P

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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
You put $600 in the bank for 3 years at 15%. A. If Interest Is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the third year. B. Use the future value of $1 table In Appendix B and verify that your answer is correct.
A customer takes out a loan of $130,000 on January 1, with a maturity date of 36 months, and an annual interest rate of 11%. If 6 months have passed since note establishment, what would be the recorded interest figure at that time? A. $7,150 B. $65,000 C. $14,300 D. $2,383
If your Visa credit card has an APR of 14.49%, compounded monthly and your current balance is $425.69. a) If you make no payments and no additional purchases for one year, what will bethe amount owed at the end of that year?b) How much total interest will be paid?c) What is the nominal rate?d) What is the effective annual rate (EAR)?e) Suppose this credit card company requires a minimum monthly payment of $15.Assuming that no additional purchases are made and also assuming that this minimum amount is paid every month, prepare an amortization schedule for the first three months of payments.
Suppose your Visa credit card charges an APR of 13.5%, compounded monthly and your current statement shows a balance of $758.50.a) If you make no payments and no additional purchases for one year, what will bethe amount owed at the end of that year?b) How much total interest will be paid?c) What is the nominal rate?d) What is the effective annual rate (EAR)?e) Suppose this credit card company requires a minimum monthly payment of $25.Assuming that no additional purchases are made and also assuming that this minimum amount is paid every month, prepare an amortization schedule for the first three months of payments.
Suppose that you owe $2,000 on a credit card that charges 18% APR and you pay either the minimum 10% or $20, whichever is higher, every month. How long will it take you to eliminate the debt? Assume that the bank uses the previous-balance method to calculate your interest, meaning that the bank does not subtract the amount of your payment from the beginning balance but charges you interest on the previous balance.
A payday lender lends money on the following terms: “If I give you $100 today, you will write me a check for $120, which you will redeem or I will cash on your next payday.” Noting that calculated rates would be even higher for closer paydays, assume that the payday is two weeks away. (a) What nominal interest rate per year (r) is the lender charging? (b) What effective interest rate per year (ia) is the lender charging? (c) If the lender started with $100 and was able to keep it, as well as all the money received, loaned out at all times, how much money does the lender have at the end of one year?
Many lending agencies compound interest more often than yearly, and as we noted in Example P.2, they are required to report the annual percentage rate, or APR, in a prominent place on the loan agreement. Furthermore, they are required to calculate the APR in a specific way. If r is the monthly interest rate, then the APR is calculated using APR = 12 ✕ r. (a) Suppose a credit card company charges a monthly interest rate of 1.8%. What APR must the company report? (Round your answer to the nearest tenth of a percent.) %(b) The phrase annual percentage rate leads some to believe that if you borrow $5000 from a credit card company which quotes an APR of 21.6%, and if no payments are made, then at the end of 1 year interest would be calculated at 21.6% simple interest on $5000. How much would you owe at the end of a year if interest is calculated in this way? (Round your answer to the nearest cent.)$ (c) If interest is compounded monthly (which is common), then the actual amount you would…
One bank offers to loan you money at an interest rate of 12% compounded quarterly, and another bank offers to loan you money at 11.8% compounded continuously. Which loan would you prefer, and why?
The Second National Bank of Fullerton advertises an APR of 15%, but it indicates in the “small print” that compounding occurs on a monthly basis for personal loans with no collateral required. This is a multi-part question. Once an answer is submitted, you will be unable to return to this part. Determine the APY you would pay using an equation. The APY paid would be % per year.
A bank is offering a loan of $20,000 with an interest rate of 9%, payable with monthly payments over a 4-year period. a. Calculate the monthly payment required to repay the loan. b. This bank also charges a loan fee of 4% of the amount of the loan, payable at the time of the closing of the loan (that is, at the time the borrower receives the money). What effective interest rate is the bank charging?
PLEASE HELP ASAP The client has made a deposit in the bank in the amount of 10,000$. The duration of the deposit is 3 years. The interest rate on the deposit is 8% with quarterly capitalization.a) Please calculate how much the customer has earned on this deposit? b) Please calculate the effective interest rate for this deposit? c) What was the real interest rate for this deposit if inflation was 2% per annum? d) If the customer would like to systematically save in an equal amount (instead of making a deposit at the beginning), how much he/she would have to pay into the deposit quarterly at the end of the quarter to have the same return on investment as in point a) - the interest rate is the same as in point a) .e) Would an investment in shares, for the same period, bought initially at 120$ and then sold at 130$, bring a higher or lower profit rate than the above investment. Note the shares paid a dividend of 6.80 $ annually at the end of each the year.

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