Type only your answer in the space provided below with the $ and no spaces, rounding the answer to the nearest whole number. Bank A offers a $120,000, 30 year, 4% fixed- rate loan with a closing cost of $1200 and no points. Bank B offers a $120,000, 30 year. 3.5% fixed- rate loan with closing costs of $1200 plus 2 points. Question costs $ Question costs $ Bank A closing Bank B closing

Type only your answer in the space provided below with the $ and no spaces, rounding the answer to the nearest whole number. Bank A offers a $120,000, 30 year, 4% fixed- rate loan with a closing cost of $1200 and no points. Bank B offers a $120,000, 30 year. 3.5% fixed- rate loan with closing costs of $1200 plus 2 points. Question costs $ Question costs $ Bank A closing Bank B closing

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter22: Providing And Obtaining Credit

Section: Chapter Questions

Problem 3P: Del Hawley, owner of Hawleys Hardware, is negotiating with First City Bank for a 1-year loan of...

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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
Find the annual financing cost of a 45 day revolving credit agreement with a 0.5% commitment fee. Assume you borrow $377,863m at 5.96%. You can borrow up to $500,000. b.Find the annual financing cost (AFC) or a 30 day line of credit where the bank requires a 10% compensating balance requirement. Assume you borrow $211,895m at 5.39% and you have $20,000 in the bank.
DEF Corporation will be needing P1,000,000 additional cash inflow. It is looking to finance this through either Bank One or Bank Zero for a period of 6 months. Bank One offers a 10% loan but requires a P20,000 bank charge. On the other hand, Bank Zero is willing to offer an 8% loan but requires P100,000 compensating balance. Which bank should DEF approach? In the space below, provide the preferred bank's simple annual cost of loan. (format: 6.67 for 6.6666%)
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Using the information provided please show all work and formulas in excel ! Suppose that you have two loan choices with monthly payments (a) What is the incremental borrowing cost of $30,000 for loan 1 over loan 2 if you hold the loan for the entire term and there are no origination costs for the two loans? (b) What is the incremental borrowing cost of $30,000 for loan 1 over loan 2 if you hold the loan for only 6 years (72 months) and there are no origination costs for the two loans?
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