Your firm is considering two one-year loan options for a $506,000 loan. The first carries fees of 2.4% of the loan amount and charges interest of 3.6% of the loan amount. The other carries fees of 1.8% of the loan amount and charges interest of 4.7% of the loan amount. a. What is the net amount of funds from each loan? b. Based on the net amount of funds, what is the true interest rate of each loan?
Your firm is considering two one-year loan options for a $506,000 loan. The first carries fees of 2.4% of the loan amount and charges interest of 3.6% of the loan amount. The other carries fees of 1.8% of the loan amount and charges interest of 4.7% of the loan amount. a. What is the net amount of funds from each loan? b. Based on the net amount of funds, what is the true interest rate of each loan?
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 14P
Related questions
Question
Your firm is considering two one-year loan options for a
$506,000
loan. The first carries fees of
2.4%
of the loan amount and charges interest of
3.6%
of the loan amount. The other carries fees of
1.8%
of the loan amount and charges interest of
4.7%
of the loan amount.a. What is the net amount of funds from each loan?
b. Based on the net amount of funds, what is the true interest rate of each loan?
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