Q: Explain quoted interest rate
A: Quoted interest rate: It is other ways known as nominal interest rate or annual percentage rate and…
Q: What is marginal rate (for debt)?
A: Marginal rate of debt is the rate of interest expected by the investors on their debt instruments…
Q: How can we calculate the Times-Interest-Earned Ratio?
A: Times Interest Earned Ratio: It is one of the solvency ratios. It is a measure to evaluate the net…
Q: What are Bond prices and interest rates? And what is the relationship between them?
A: Bond is a debt instrument which provides regular periodic interest income to an investor. Generally,…
Q: What is interest coverage ratio?
A: The interest coverage ratio is the ratio which shows the ability of the company to pay the interest…
Q: What is an interest rate swap?
A: Swap is a derivative instrument where two parties agree to exchange payment responsibility on two…
Q: How to calculate Present Value Interest Factors?
A: PVIF is known as Present Value Interest Factor. PVIF refers to a factor that is very useful in…
Q: Identify the MARR (or external interest rate)?
A: A minimum acceptable rate of return (MARR) is the all-out advantage that a speculator wants to pick…
Q: What is The Relationship between Interest Rate Risk, Default Risk, and Risk Premiums
A: Risk refers to the chances of any changes in the prices of securities underlying with an investor…
Q: How does risk affect interest rates?
A: The risk and the interest rates are in a direct relationship that is, the greater the risk the…
Q: What is the relationship between the time value of money and inflation?
A: Inflation is the rate at which the purchasing capability of money decreases over time. It is…
Q: How does inflation affect interest rates, security prices, and financial planning?
A: Inflation is the situation in the economy due to which prices of goods and services increases, as a…
Q: What is realized real interest rates? Give example.
A: realized real interest rate = nominal interest rate - actual inflation rate realized real interest…
Q: What is interest rate parity?
A: Interest rate parity: Interest rate parity is a theory concerning the association among spot…
Q: What is going interest rate?
A: An interest rate is the rate which is applicable on loan and the borrower has to pay the interest…
Q: What effects do relative inflation rates have on relative interest rates?
A: Relative Inflation Rates can be defined as the rates of inflation and exchange rates established…
Q: What does the annuity factor indicate?
A: Annuity factor It indicates the discounted factor’s sum for all the n maturities when all n…
Q: a. Explain the expectations theory of the term structure of interest rates. b. What do the shapes of…
A: Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: When is it recommended to compute the effective interest rate per payment period?
A: When there is a compounding of interest, then the EIR per payment period is recommended. As it is a…
Q: Illustrate with examples , that Interest rate is equivalent to the savings rate from the deposits?
A: Interest received It is the amount that is received to a person for the investment made. A rate at…
Q: what is the formula for compounding interest?
A: Compound interest can be defined as the interest earned on principal amount and on all previous…
Q: What does the Times Interest Earn ratio state? Provide an example
A: Times interest earned ratio tells about the ability of the company to pay it's obligations which is…
Q: When is the Times-Interest-Earned Ratio?
A: The TIE is a calculation of a firm's ability to reach its debt liability based on its current…
Q: How is the Equivalence Calculations made with Effective Interest Rates?
A: The formula for Effective annual rate is Where, r - rate of return n - number of compounding.…
Q: How can we determine the borrowing rate of return?
A: The borrowing rate of return is the return that is charged on the borrowings made by the firms or…
Q: What is net interest margin(NİM)?
A: There are various profitability ratios
Q: What is the Rate of Interest?
A: Given P= 10000 A=5000 n=1year r=?
Q: What is the effect on interest of an interest rate swap?
A: Derivatives: Derivatives are some financial instruments which are meant for managing risk and…
Q: Question 1 (a) Clearly distinguish between nominal interest rate and effective interest rate.
A: Hello. Since your question has multiple parts, we will solve the first question for you. If you want…
Q: What is credit risk
A: In the world of finance credit risk is one of the most important risk and one of the most tangible…
Q: 1. How are interest rates determined? Discuss and explain the interest rate equation and its…
A: Interest rate can be defined as the price that lenders charge for lending their money to borrowers.…
Q: Explain Interest Rates and Risk?
A: Interest Rate: Interest rate is the percentage of interest charge by a lender on his principal…
Q: Explain the prime interest rate.
A: Interest are generally charged on the loans. Borrowers are needed to pay the interest to the person…
Q: What is nominal annual interest rate?
A: Interest rate is a crucial part of any financial instrument. There are two types of interest rates:…
Q: sly. What is the effective interest rate e
A: Introduction: Effective interest rate also known as effective annual rate(EAR) is the interest that…
Q: Explain the interest rate risk?
A: The amount charged by a lender to a borrower for any type of debt is referred to as an interest…
Q: How VAT affects the interest rate?
A: Solution-Value Added Tax A value-added tax (VAT) is a consumption tax placed on a product whenever…
Q: Explain Nominal and real interest rates.
A: Inflation: Inflation is the speed of increase in costs throughout a given time span. Inflation is…
Q: What are the forward rates of interest? How are they determined? What do they have to do with…
A: Forward rates of interest has basis as expectation of future interest rate that are implied in the…
Q: What is Interest Risk and Cash Flow Risk?
A: Risk exists in all business operations and transactions however the business should take actions to…
Q: Describe the methods of calculating interest?
A: In the finance industry, every decision revolves around the interest rate. This is a crucial…
Q: Define implicit rate of interest.
A: Bonds: Bonds are long-term promissory notes that are issued by a company while borrowing money from…
Q: What are the methods of calculating Interest?
A: Interest is an additional amount received on a deposited amount for a deposited period. It increases…
Q: What is the Cumulative interest payment?
A: Cumulative interest payment is the sum of all previous interest payments that are made for an…
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- 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?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?
- 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 yearCalculating 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?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.
- 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)?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?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.