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- A borrower has two alternatives for a loan: (1) issue a $300,000, 120-day, 8% note or (2) issue a $300,000, 120-day note that the creditor discounts at 8%. Assume a 360-day year. a. Calculate the amount of the interest expense for each option.$ for each alternative. b. Determine the proceeds received by the borrower in each situation. (1) $300,000, 120-day, 8% interest-bearing note $ (2) $300,000, 120-day note discounted at 8% $ c. Alternative is more favorable to the borrower because the borrower .A company decides to obtain a small-business loan of $240,000. The financial institution from which the company borrows offers two options: a. Borrow $240,000 at 6% with monthly payments of $4,639.87 over 5 years. b. Borrow $240,000 at 7% with monthly payments of $2,786.60 over 10 years. Required: 1. Record the issuance of an installment note payable under each option. 2. Record the payments for the first and second month under each option. 3. Determine the total amount of interest paid under each option over the full period of the note.Dinero Bank offers you a $39,000, 8-year term loan at 7 percent annual interest. Required: What will your annual loan payment be? (Do not round your intermediate calculations.) $7,475.82 $6,531.24 $6,988.43 $6,786.58 $6,280.40
- 1. A lender is offering you a $300,000 30Y FRM at 7.2%. What is your monthly payment over the life of the loan? $2,036.36 2. You decide to originate the loan, but move at the end of 5 years. What is the remaining balance you owe the bank given the due-on-sale clause? Number 2 pleaseDrake Corporation takes out a term loan payable in 12 year-end annual installments of P5,000 each. The interest rate is 14 percent. (a) What is the amount of the loan? (b) what is the loan balance at the end of year 2? CHOOSE THE LETTER OF ANSWERA. (a)P27,301.50 and (b) P26,080.63B. (a)P15,301.50 and (b) P26,080.63C. (a)P26,301.50 and (b) P26,080.63D. (a)P25,301.50 and (b) P26,080.63E. None of the aboveThe bank offers you the following three options to pay back the loan from the previous question: I: To pay the interest of 6.00% annually II: To pay an interest of 0.49% monthly III: To pay an interest of 1.46% quarterly Which of these three options would be most beneficial for you? O All three options would be equally beneficial Option II ○ Option III Option I O Option II and Option III would be equally beneficial
- KBL Bank Limited quotes a 21 percent interest rate on one-year loans. So, if you borrow $75,000, the interest for the year will be $15,750. Because you must repay a total of $90,750 in one year, the Bank requires you to pay $7,562.50 per month ($90,750/12) over the next 12 months. a) Is this a 21 percent loan? What rate would legally have to be quoted? What is the effective annual rate?Company ABC is offered a 1-year loan of $50,000 from Bank DEF. The nominal interest rate is 12%p.a. and interest is to be paid at the beginning of the loan. Question 17 options: 1) The effective interest rate of the loan will be 12.00%p.a. 2) The effective interest rate of the loan will be 10.71%p.a. 3) The effective interest rate of the loan will be 13.64%p.a. 4) There is insufficient information to determine the effective interest rate.Your bank offers the following options on a $100,000 mortgage: 1. A 15-year, 4% loan with no points 2. A 15-year, 3.5% loan, with 1.5 discount points.. The interest portion of the first payment (INT) is. for option 2. $333.33: $291,67 None of the above. O $4,000; $3,500 O $406.36; $423.21 for option 1, and
- Cliff Capital Corporation (CCC) is taking out a new 2-year bank loan for $100,000 at 6% interest (APR monthly compounding). The bank charges 1% closing fees on the loan. If CCC pays off the loan in equal monthly installments, then what is the effective annual interest rate of this loan? Select one: a. 6.17% b. 6.67% c. 6.99% d. 7.22% e. None of the above.TBTF Bank makes a 7 year interest only loan to AFC Inc of $4,300,000.00. The interest rate on the loan is i(4) = 8.125%, and the payments will be made annually. TBTF reinvests the payments at an interest rate of i(4) = 5.250%. At maturity, what is TBTF Bank's annual ROI over the lifetime of the loan? (AFC does not default.) a. 8.012% O b. 7.778% O c. 7.856% O d. 7.545% O e. 7.701%Suppose a homeowner has an existing mortgage loan with these terms: Remaining balance of $150,000, interest rate of 8 percent, and remaining term of 10 years (monthly payments). This loan can be replaced by a loan at an interest rate of 6 percent, at a cost of 8 percent of the outstanding loan amount. Required: a. What is the net benefit of refinancing? Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places. b. What is the NPV if the homeowner expects to be in the home for only five more years? Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places. a. Net benefit of refinancing b. NPV $ + 6,552.77 1,819.91