XXX, Inc. finances tis seasonal working capital need with short-term bank loans. Management plans to borrow $65,000 for a year. The bank has offered the company a 3.5 percent discounted loan with a 1.5 percent origination fee. What are the interest payment and the origination fee requiered by the loan? What is the rate of interest charged by the bank?

Q: National Co. needs to borrow P300,000 for the next 6 months. The company has a line of credit with a…

A: Introduction: Borrowing is quite prevalent in adulthood. Almost everyone will need a loan at some…

Q: ABC Corporation has a daily collection of 180,000 from a selected foreign customer group. The bank…

A: The difference between cash inflows and the initial investment is defined as NPV. NPV is used to…

Q: Beez Kneez co. needs to borrow $4 million for an upgrade to its headquarters and manufacturing…

A: The estimated loan rate is 7.22%.

Q: Angela made an 180-day investment arrangement involving two consecutive 90 day $100,000 bank bills.…

A: Given Information Investment of Each Bank Bills = $100,000 Two consecutive 90days (2 Bank Bills)…

Q: Tokyo Corporation must pay its supplier P500,000. Tokyo Corp's bank has advertised a 270-day loan…

A: Compensating Balance: Compensating balance means the amount that a borrower deposits in the…

Q: A business wants to borrow $300,000 from a bank for a future investment. The bank offers a 5 year…

A: P= $300,000  T= 5 year compounded quarterly R= 5% interest on the debt Sinking fund interest= 4%,…

Q: Elliott Credit Corp. wants to earn an effective annual return on its consumer loans of 17.1 percent…

A:

Q: A bank that provides overdraft protection charges 12 percent for each $100 (or portion of $100)…

A: Part (a)The overdraft protection charge = 12% for each $100 (or portion of $100) borrowedThus 12% is…

Q: Oldhat Financial starts its first day of operations with â$12 million in capital. A total of â$140…

A: . Assets Liabilities Particulars Amount ($) Particulars Amount ($) Required reserves (140*8%)…

Q: Tommy Corp. can borrow from its bank at 17 percent to take a cash discount.  The terms of the cash…

A: The terms of the cash discount are 3/19, net 45. Discount %age, D = 3%Discount period, DP = 19…

Q: Vandermark Credit Corp. wants to earn an effective annual return on its consumer loans of 15.25…

A: Effective annual rate = [1+Annual Rate/365]^365 - 1

Q: Today is July 1 and Hilda Company will need a fixed interest rate loan of P1,200,000 for 6 months…

A: The investors will invest to earn profits from the investment. The investment can be made in shares,…

Q: A corporation arranges for a $10 million line of credit. The corporation needs to have regular…

A: Note: The options provided are incorrect, I have provided the solution with answer. Please recheck…

Q: National Co. needs to borrow P300,000 for the next 6 months. The company has a line of credit with a…

A: The company does not have sufficient compensating balance so it will have to borrow a sum greater…

Q: A local bank is advertising that it pays depositors 6% compounded monthly, yielding an effective…

A: Effective Annual Rate refers to the real return on a savings account or any interest-paying…

Q: James borrows $10,000 from the bank. By the time the loan is repaid, James has paid thebank $10,400.…

A: Purchasing Power: Purchasing power indicates the financial ability to buy commodities.…

Q: Mountain Grains Cooperative wants to invest $42,000 in a​ short-term deposit. The bank offers 1.4​%…

A: Future value can be calculated by using present value multiplied by 1 plus interest rate.

Q: NTA Co. needs to borrow P300,000 for the next 6 months. The company has a line of credit with a bank…

A: Borrowing is a common occurrence in adulthood. At some point in their lives, almost everyone will…

Q: A company borrowed $4,250,000 at an effective rate of 4.25% for 5 years. To make sure it has the…

A: Note: No intermediate rounding is done and final answer is rounded to two decimal places. a) Future…

Q: Uptown Bank has granted a line of credit of $80,000 with an interest rate of 7.5 percent and a…

A: Given information: Line of credit amount is $80,000 Interest rate is 7.5% Compensating balance…

Q: Suppose a company borrowed $1 million at a rate of 9% simple interest, with interestpaid at the end…

A: The question is based on the concept of calculation interest on the principle. Formula as,

Q: a. Calculate the loan’s annual financing cost. b. Calculate the loan’s annual percentage rate. c.…

A: Annual percentage rate (APR) refers to a real interest rate which an investor is expect from his…

Q: Y Corporation has daily collections of P180,000 from a selected foreign customer group. The bank…

A: Solution Given Amount 130000 Current clearing time 8 days Reduced clearing time 3…

Q: To pay its supplier, Tokyo Corporation requires P300,000. The bank of Tokyo Corporation offers a…

A: Compensating balance Sometimes it is required at bank to keep a deposit of funds to qualify for the…

Q: On April 2, 2020, shortly after the $7.5 million deposit outflow, Key Bank had borrowed the needed…

A: Net interest margin in simple word refers to interest earned by bank on loan given excluding…

Q: The Tropical State Bank has $1,000 in total assets (all of which are earning assets), $700 of which…

A: Since more than one question is asked at a time. As per our policy, we only answer one 1 question.…

Q: Elliott Credit Corp. wants to earn an effective annual return on its consumer loans of 14.5 percent…

A: The formula used as follows: APR=m×1+EAR1m-1

Q: Utah Inc. would need cash of P5,000,000 for a period of 3 months f nk. The latter offered 12%…

A: Simple effective cost is overall cost of loan including the origination cost and interest.

Q: Company is considering to establish a line of credit with a local bank to make up for the cash…

A: Solution:  Expected cost of establishing a line of credit: Particulars Amount Committed Cost…

Q: ABC is inclined to take a bank loan that has a face amount of P5,000,000, a term of 6 months,…

A: Generally, The loan is paid out off several Installments. Based on the credit history of borrower,…

Q: A local bank is advertising that it pays depositors 6% compounded monthly, yielding an effective…

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: In the example below, we will use year-end assets. Bank A receives $70 in deposits at 5% and,…

A: The calculation of the  amount of G-Bond bank should purchase is as follows: A bank should purchase…

Q: A bank invested $50 million in a two-year asset paying 10 percent interest per year and…

A: Banks take deposits from customers and pay them lower interest rate or take money from investors or…

Q: Brady and Sons uses accounts receivable as collateral to borrow money for operations and payroll…

A: Given information: Amount borrowed $300,000 Interest rate up to 4 months 12% Interest rate after 4…

Q: Angela made an 180-day investment arrangement involving two consecutive 90 day $100,000 bank bills.…

A: Investment - $100,000 Yield rate of first bank bill - 2.581% p.a. simple interest Investment rate of…

Q: Oldhat Financial starts its first day of operations with$11 million in capital. A total of $120…

A: Balance sheet of a bank is a statement where bank records their assets and liabilities, loans made…

Q: A bank has two assets: 70 percent in one-month Treasury bills and 30 percent in real estate loans.…

A: Liquidation:-  Liquidation is defined as the process under which company selling off its inventory,…

Q: Y Corporation has daily collections of 130,000 from a selected foreign customer group. The bank…

A: Solution Given Amount 130000 Current clearing time 8 days Reduced clearing time 3…

Q: A bank has an interest rate spread of 150 basis points on $30 million in earning assets funded by…

A: Pretax income is income before the taxes have been paid.

Effective Interest Rate

The term interest rate can be defined as the amount that is charged by the lender as a percentage on the principal amount. Interest rate which is charged annually is known as annual percentage rate.