the yearly effective rate over the five-year period?

Q: Find the effective interest rate for a $1,500 loan for four years compounded semiannually at an…

A: Calculation of Effective Interest Rate:The effective interest rate is 8.16%.Excel Spreadsheet:

Q: You borrow $280,000 at 4.00% per year and will pay off the loan in equal payments starting one year…

A: Borrowings are the liability that is used to finance the requirement of the funds. The borrwer needs…

Q: Establish loan amortization schedules for the following loans to the nearest cent. a. A 36-month…

A: When a loan is taken, borrower requires to pay interest on it. Apart from interest, instalment of…

Q: For a Federal Credit Union that provides a compounded quarterly interest rate of 8 percent per year,…

A: Federal credit union is referred as the credit union as per the regulatory comprehension of National…

Q: You are given a loan on which interest is charged over a 4-year period, as follows: i. an effective…

A: Let the annual effective interest rate = r 1st year discount rate = 6% 2nd year discount rate = 4%…

Q: A local finance company quotes a 14 percent interest rate on one-year loans. So, if you borrow…

A: The annual percentage rate is the rate that represents the interest rate for a whole year instead of…

Q: You repay a student loan of $20,000 in equal monthly installments over 5 years at a nominal interest…

A: Equated monthly installment is referred to as an amount payable for each and every month to the bank…

Q: A loan is repayable by a decreasing annuity payable annually in arrears for 20 years. The repayment…

A: First Year Payment = $6,000 Decrease in payment = $200 each year Effective Interest Rate = 9% per…

Q: The Stafford plan now offers student loans at 4% annual interest. After two years the interest rate…

A: Interest charged on the principal amount and the interest accrued is known as Compound Interest. It…

Q: A loan of £4,000 is to be repaid over 5 years by a level annuity payable monthly in arrears. The…

A: Loan payback is the process of repaying a lender for the money borrowed. The loan is repaid in a…

Q: You are given a loan on which interest is charged over a four-year period, as follows: i) An…

A: The interest rate which is applied on the financial products of the company and would be considered…

Q: Calculate the effective annual rate on each of the following loans: a. A $5,000 loan for two years,…

A: Interest refers to the cost of money borrowed from a lender. It can be simple or compound. It is…

Q: A recent graduate's student loans total $17,000. If these loans are at 4.2%, compounded quarterly,…

A: using financial calculator, N = 8*4 =32 I/Y = 4.2%/4 = 1.05% PV = -17,000

Q: FIND THE SIMPLE INTEREST ON 8,000 LOANED AT AN ANNUAL INTEREST RATE OF 12% FOR TWO YEARS. IDENTIFY…

A: Formula: Maturity value = Principal + Interest amount

Q: Suppose that you borrow $10,000 from a bank to purchase a car. You agree with the bank to repay the…

A: Given: Particulars Amount Loan $10,000 Interest rate 16% Years 1

Q: If you borrow $7,500 at $550 interest for one year, what is your effective interest rate for the…

A: The effective rate of interest refers to the return on savings or interest on the investment…

Q: A 4 year loan of $125,000 with equal installment payments at the end of each year.The interest rate…

A: Therefore, P*[1-1/(1+r)^n]/r = 125,000  => P*[1-1/(1+7%)^4]/7% = 125,000 =>P*[1-0.7628]/7% =…

Q: Ahlam borrows AED 3,000,000 to be repaid over 6 years at 8 percent. What is the repayment of…

A: An annual mortgage payment is an annual payment that is to be paid for a specific period of time to…

Q: A loan is repayable by a decreasing annuity payable annually in arrears for 20 years. The repayment…

A: Loan period = 20 Years First payment amount = $ 6000 Annual decrease in payments = $ 200 Interest…

Q: A loan is being repaid with 20 payments of 1500 at the end of each year. Interest is calculated at…

A: In the question above. With prospective method we will discount all the outstanding payments due on…

Q: Prepare an amortization schedule for a three-year loan of $108,000. The interest rate is 9 percent…

A: In this we have to present value FACTOR and find annual equal payment.

Q: Calculate the effective annual rate on each of the following loans: 1. $5,000 loan for 2 years,…

A: Effective interest rate refers to the real return that an individual or company earns on a saving…

Q: How much interest is payable each year on a loan of $4,000 if the interest rate is 10% (simple…

A: Following is the answer to the given questions

Q: Consider the following loan. Complete parts (a)-(c) below. An individual borrowed $77,000 at an APR…

A: Borrowed amount = $77,000 Annual interest rate = 7% Number of payment per year = 12 Loan term = 23…

Q: Suppose you deposit $4,000 at the end of each quarter for five years at an interest rate of 8%…

A: Given: The deposited amount is $4,000 for five years The interest rate is 8% Deposited quarterly…

Q: ate of 12% per year.

A: Simple interest  (SI) is the cost of borrowing. It is the interest only on the principal amount as a…

Q: You have taken out a home loan of $400,000 at an interest rate of 3.6% per annum compounded monthly.…

A: A loan is a debt amount borrowed by one person from another person. A loan payable in equivalent…

Q: New Town Bank offers you a line of credit of $50,000 with an interest rate of 2.1 percent per…

A: An investor invests in specific securities in order to get some returns, the actual rate of return…

Q: A payday loan company charges 5 percent interest for a two-week period. What would be the annual…

A: Given: Interest rate for two-weeks = 5%

Q: Assume you take a loan of $10,000 with interest of 5%/year compounded yearly. You intend to pay it…

A: First, determine the monthly payment of the loan using the Excel PMT function where the ‘RATE’ is…

Q: Find the effective interest rate for a loan for four years compounded semiannually at an annual rate…

A: Effective Interest rate is rate effectively we are paying on a loan on annual basis when compounding…

Q: Consider a student loan of $12,500 at a fixed APR of 12% for 20 years. a. Calculate the monthly…

A: A concept that implies the future worth of the money is lower than its current value due to several…

Q: Ross Land has a loan of $8,500 compounded quarterly for four years at 4%. What is the effective…

A: Effective rate of Interest-The effective rate means the actual rate of interest which is accrued on…

Q: Establish loan amortization schedules for 3- year loan of 20.000 (initial loan) with equal payments…

A: Given Years 3 Loan  20,000.00 RATE 5%

Q: Prepare an amortization schedule for a five-year loan of $71,500. The interest rate is 7 percent per…

A: Amortization schedule for a five-year loan of $71,500 Caluclating Annual Payment on BA 2 PLUS…

Q: City Bank offers a 7-year CD with a nominal rate of interest of 7%. If compounding occurs…

A: continuous compounding effective annual rate =  e^r - 1 where, r = rate of interest i.e. 7% or 0.07…

Q: A loan is repayable by a decreasing annuity payable annually in arrears for 20 years. The repayment…

A: Loan: when money is given to another party in exchange for repayment of the (principal amount +…

Q: You are about to borrow $25,000 from a bank at an interest rate of 10% compounded annually. You are…

A: The schedule that shows the nominal amount of principal and interest that is paid in amortizing loan…

Q: loan of £4,000 is to be repaid over 5 years by a level annuity payable monthly in arrears. The…

A: Given information : Loan amount 4000 Time period (years)  5 Interest rate 1% Note : I will…

Q: Alan borrows $100,000 at nominal interest rate 9% per annum which matures in 5 years. Repayments are…

A: Standard Disclaimers: “Since you have posted a question with multiple subparts, we will solve the…

Q: A recent graduate's student loans total $17,000. If these loans are at 5%, compounded quarterly, for…

A: Given: Loan amount = $17,000 Interest rate = 5% Years = 8

Q: A loan is being repaid by 20 level annual payments of R, where R is three times the amount of…

A: Given: Number of level annual payments: 20 Level payments: R R is three times interest accruing in…

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.