Answered: What is the effective interest rate…

What is the effective interest rate charged to a loan of P5,000 paid after 5 years amounting to P7,250? What is the nominal rate if it is compounded semi-annually? upload your solution with signature

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 41P

See similar textbooks

Related questions

Q: If you wanted to pay off a loan of $20,000 in 10 years at a nominal interest rate of 7% compounded…

A: To determine the value of the monthly payments, we first need to determine the periodic interest…

Q: You want to buy a $200000 home. You plan to pay $20000 as a down payment, and take out a 20 year…

A: Here, Value of Home is $200,000 Down payment is $20,000 Time Period of Loan is 20 years Interest…

Q: a. What would be the annual amortizing loan payments for the bank consortium's proposal? p. What…

A: Data given:: Principal = $220 million Sahara's loan preference: n=6 years r=11.753% Bank…

Q: a. What is your effective annual interest rate (an opportunity cost) on the revolving credit…

A: Interest rate is the percentage rate being charged upon the par value of the money issued or funded.…

Q: What is the payment for a loan of $320000 with an interest rate of 8.13% compounded monthly for 6…

A: using financial calculator to solve the monthly payment

Q: Suppose you take out a loan for 160 days in the amount of $14,000 at 7% ordinary interest. After 40…

A: The interest amount is computed by multiplying the amount of the loan with the interest rate and the…

Q: Assume you borrow $10,000 today and promise to repay the loan in two payments, one in year 2 and the…

A: Formula to calculate the future payments is P = F(P/F, i,n) Where F is the future accumulated…

Q: A borrower can borrow $10 million at a fixed-rate loan at 7.5% for six years, or a floating-rate…

A: The borrower should select the lowest rate alternative among the fixed rate and floating rate plus…

Q: Answer the Situation below correctly show your complete solution. A loan of 30 000.00 Php is to be…

A: Since you have posted a question with multiple sub-parts, we will solve the first three subparts for…

Q: Engr, Odon is paying a loan five thousand pesos 4% quarterly for 3 years. If the payment is to start…

A: pmt =p×rm1-1+rm-m×nwhere,r=rate of returnm=frequency of compoundingn = number of yearsp=principal

Q: What is the annual interest rate if a simple interest loan of $10,000 for 4 years charges a total of…

A: When interest rate is simple interest: Interest = Principal*time*rate time and rate should be of…

Q: Solve the following problem completely. A loan is to be repaid quarterly for 5 years that will start…

A: Quaterly Payment is $10,000 Interest rate is 6% compounded quaterly To find: Present value of the…

Q: Suppose you take out a loan for 160 days in the amount of $14,000 at 7% ordinary interest. After 40…

A: Time has been valuable in all aspects but in terms of finance, time has a money value. The worth of…

Q: What is the actuarial rate for a simple loan of $1,500 that requires a repayment of 2,000 in 5

A: In this we have to calculate effective interest rate by use of present and future value.

Q: You borrow $160,000; the annual loan payments are $24,368.03 for 30 years. What interest rate are…

A: Calculation of interest rate being charged is shown below: Hence, Interest rate charged is 15%

Q: You borrow $90,000; the annual loan payments are $12,852.25 for 30 years. What interest rate are you…

A: Interest : It is the total amount payment on loan taken or fund borrowed by any person . it may be…

Q: Assuming that the interest is the only finance charge, how much interest would be paid on a 5,000…

A: Interest is the amount paid on a loan by the borrower to the lender above the principal amount to…

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: The following loan is a simple interest amortized loan with monthly payments. $155000, 9 1/2%, 30…

A: A type of loan in which the borrower has to make a schedule for the periodic payment regarding both…

Q: Consider a five-year floating rate loan with principal of $10 million and quarterly payments based…

A: Given information: 5 year floating rate loan of $10 million

Q: A lender requires PMI that is 0.8% of the loan amount of $470,000. How much (in dollars) will this…

A: Working note:

Q: Suppose a business takes out a GHC5000, 5-year loan at 9%. If the loan agreement calls for the…

A: Here, Loan Amount = GHC 5,000 Term of loan = 5 years Interest rate = 9% Principal payment each year…

Q: .What are the annual payments for a 4-year $4,000 loan if the interest rate is 9% per year? Make up…

A: Let Annual Payment = A Amount = $ 4000 Rate(r) = 9% Years(n) = 4 Amount = A [ 1-1/(1+r)^n]/r

Q: What is the size of eight equal annual payments to repay a loan of $1,000? The first payment is due…

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

Q: Answer the Situation below correctly show your complete solution. A loan of 30 000.00 Php is to be…

A: Hello. Since your question has multiple sub-parts, we will solve the first three sub-parts for you.…

Q: A $10,000 loan amortized over 5 years at an interest rate of 10% per year would require payments of…

A: Here, Principal Amount of the Loan is $10,000 Annual Payments is $2638 Time Duration of loan is 5…

Q: You get a 25-year loan of Php150,000 with a 8% annual interest rate. What are the annual payments?…

A: Annual payment of loan can be calculated by using this formula PMT =(PV*r)/[1-1/(1+r)n] Where PMT=…

Q: Assume you borrow $10,000 today and promise to repay the loan in two payments, one in year 2 and the…

A: Let, the size of the payment in 4th Year be X. The calculation of the value of X is as follows:

Q: You borrow $2,400 to pay for a Caribbean vacation and will pay it off over 2 years with regular…

A: Loan amount = $2400 Number if years = 2 Number of months "n" = 2*12 = 24 Interest rate = 8% Monthly…

Q: What would be r in this problem? A P100,000 loan is to be paid monthly for 2 years with an interest…

A: Effective Annual Rate: The effective annual rate of interest is the actual or the real rate of…

Q: how much do you need to repay for your yearly instalment if you had borrowed $20,000 at 10% for 5…

A: Year installment will be calculated by amount of borrowings divided by Present value of an ordinary…

Q: You wish to buy a house. The market value of the house is $650,000 and you have saved $120,000 as a…

A: Interest Rate = 6.5% Time Period = 26 Years Market Value = $650,000 Down Payment = $120,000

Q: What single payment today would replace a payment of $1,700 in 2 years and a payment of $4,400 in 6…

A: Let the single payment today = X Payment in year 2 (P2) = $1700 (After 8 quarters) P6 = $4400 (After…

Q: stomer wishes to have an amount of R300 000 at the end of 10 years. The bank pays an interest rate…

A: The given problem can be solved using PV function in excel. PV function computes present worth for…

Q: You want to buy a $280000 home. You plan to pay $56000 as a down payment, and take out a 15 year…

A: Dear student we need to use excel to solve this problem. The formulas that you need to understand to…

Q: What is the maximum APR you can accept if you can afford to make monthly payments of $120 on a…

A: The yearly rate that borrower pays on loan and investors receives on deposits is the annual…

Q: Suppose you take out a $37,000 4-year balloon loan from a bank at an interest rate of 9.8%. What…

A: Balloon payment is future value of payment considering the interest rate and period.

Q: A bank is willing to lend money at 6% interest, compounded annually. How much would the bank be…

A: Given interest rate = 6% Interest is compounded annually. Payment to be received after 4 years =…

Q: What is the simple interest rate if Rogine paid an interest of P2,100 after 2 years and 6 months on…

A: A method of computing interest amounts in which the compounding effect was not considered by the…

Q: What would be r in this problem? A $100,000 loan is to be paid monthly for 2 years with an interest…

A: Here, Loan Amount is $100,000 Time Period is 2 years Payment Period (p) is Monthly i.e 12 Interest…

Q: Suppose you take out a loan for 160 days in the amount of $12,000 at 7% ordinary interest. After 40…

A: The loan is a facility to the individual in which the lender provides the funds to the borrowers at…

Q: Suppose you take out a loan for 160 days in the amount of $14,000 at 7% ordinary interest. After 30…

A: P= $14,000 R= 7% T= 160 days Ist Installment= $1,500 after 30 days IInd Installment= $2,000 after…

Q: How much interest will be collected in advance from a loan of $ 25,000 for 2 ½ years if the discount…

Q: What would the required payment be on a K1,000 loan that is to be repaid in three equal installments…

A: Computation:

Q: If it takes $50 per month for 18months to repay a loan of $800. What rate compounded monthly is…

A: As per the question, Monthly Payment (P) = $50 Months(n) =18 Loan Amount =$800 Interest Rate for 1…

Q: 1. Let's assume that a loan of $100,000 with an annual interest rate of 6% over 30 years pays…

A: Accumulation rate is the increase in size of asset, position or overall buying activity of…

Question

What is the effective interest rate charged to a loan of P5,000 paid after 5 years amounting to P7,250? What is the nominal rate if it is compounded semi-annually? upload your solution with signature sifan ?

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 3

VIEW

Step by step

Solved in 3 steps

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, accounting and related others by exploring similar questions and additional content below.

Similar questions

Calculating interest and APR of installment loan. Assuming that interest is the only finance charge, how much interest would be paid on a 5,000 installment loan to be repaid in 36 monthly installments of 166.10? What is the APR on this loan?
Define the stated (quoted) or nominal rate INOM as well as the periodic rate IPER. Will the future value be larger or smaller if we compound an initial amount more often than annually—for example, every 6 months, or semiannually—holding the stated interest rate constant? Why? What is the future value of $100 after 5 years under 12% annual compounding? Semiannual compounding? Quarterly compounding? Monthly compounding? Daily compounding? What is the effective annual rate (EAR or EFF%)? What is the EFF% for a nominal rate of 12%, compounded semiannually? Compounded quarterly? Compounded monthly? Compounded daily?
Calculating single-payment loan amount due at maturity. Stanley Price plans to borrow 8,000 for five years. The loan will be repaid with a single payment after five years, and the interest on the loan will be computed using the simple interest method at an annual rate of 6 percent. How much will Stanley have to pay in five years? How much will he have to pay at maturity if hes required to make annual interest payments at the end of each year?
Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?
Calculating interest earned and future value of savings account. If you put 6,000 in a savings account that pays interest at the rate of 3 percent, compounded annually, how much will you have in five years? (Hint: Use the future value formula.) How much interest will you earn during the five years? If you put 6,000 each year into a savings account that pays interest at the rate of 4 percent a year, how much would you have after five years?
Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $2,500 over the next 4 years when the interest rate is 15%, how much do you need to deposit in the account? B. If you place $6,200 in a savings account, how much will you have at the end of 7 years with a 12% interest rate? C. You invest $8,000 per year for 10 years at 12% interest, how much will you have at the end of 10 years? D. You win the lottery and can either receive $750,000 as a lump sum or $50,000 per year for 20 years. Assuming you can earn 8% interest, which do you recommend and why?
Cost of Bank Loan Mary Jones recently obtained an equipment loan from a local bank. The loan is for 15,000 with a nominal interest rate of 11%. However, this is an installment loan, so the bank also charges add-on interest. Mary must make monthly payments on the loan, and the loan is to be repaid in 1 year. What is the effective annual rate on the loan (assuming a 365-day year)?
You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuity
You put $250 in the bank for S years at 12%. 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 fifth year. B. Use the future value of $1 table in Appendix B and verity that your answer is correct.
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.
If Bergen Air Systems takes out a $100,000 loan, with eight equal principal payments due over the next eight years, how much will be accounted for as a current portion of a noncurrent note payable each year?
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?