Cost of Bank Loans Gifts Galore Inc. borrowed $1.6 million from National City Bank. The loan was made at a simple annual interest rate of 12% a year for 3 months. A 25% compensating balance requirement raised the effective interest rate. Do not round intermediate calculations. Round your answers to two decimal places. a. The nominal annual rate on the loan was 11.5%. What is the true effective rate? 12.00 % b. What would be the effective cost of the loan if the note required discount interest? 12.38 % c. What would be the nominal annual interest rate on the loan if the bank did not require a compensating balance but required repayment in three equal monthly installments? %
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- Gifts Galore Inc. borrowed $1.5 million from National City Bank. The loanwas made at a simple annual interest rate of 9% a year for 3 months. A 20%compensating balance requirement raised the effective interest rate.a. The nominal annual rate on the loan was 11.25%. What is the trueeffective rate?Ezze Mattress needs to raise $200,000 for 6 months. The bank quotes a discount interest rate of 7.5% but does not require compensating balances. What is the effective annual interest rate on this loan? Multiple choice question. 7.50% 8.11% 7.84% 7.81%Leven Corporation negotiated a short-term loan of $685,000. The loan is due in 10 months and carries a 6.86 interest rate. Use simple interest to calculate the total amount of thetioan. If necessary, round the answer to the nearest cent.
- The following loan was paid in full before its due date. a) Find the value of h using an appropriate formula. b) Use the actuarial method to find the amount of unearned interest. c) Find the payoff amount. Regular Monthly Payment APR # of Payments Remaining after Payoff 8.7% 4 $214 What is the finance charge per $100 financed? h = $ (Round to the nearest cent.) The unearned interest is about $ (Round to the nearest cent.) The payoff amount is $ Enter your answer in each of the answer boxes. f12 inser f9 f1o f7 fg f6 f4 f5 esc 5 7 8. %24 3 %23The York Company has arranged a line of credit that allows it to borrow up to $45 milion at any time. The interest rate is .621 percent per month. Additionally, the company must deposit 3 percent of the amount borrowed in a non-interest bearing account. The bank uses compound interest on its line-of-credit loans. What is the effective annual rate on this line of credit? Multiple Choices 6.40% 7.71% 7.95% 7.06% 8.83%Note: kindly answer all... Please help me?? A company borrowed $7,900,000 from a bank.The company repaid the loan after 3 years with a single payment of $10,000,000. The compound interest rate (i) on the loan is: A. 11.5%, B. 9.50%, C.7%, D.8.17% The time it would take for a given sum of money to be triple at i=10% per year compound interest is closest to: A. 12 Yr B. 14 Yr C. 15 Yr D. 9 Yr E. 8yr If interest is compounded at 12% per year, how long will it take for $50,000 to accumulate to $88,600? A. 6yr B.9 Yr C. 8yr D.5yr At an interest rate (i) of 13% per year, the equivalent amount of $10,000 three years ago is closest to: A. $6245 B. $6589 C. $7245 D. $6931 E. $7833
- A bank makes a loan of $1,000,000 at a rate of 6% p.a. It also requires a compensating balance of 5%. What is the effective cost to the borrower? 6.05% 6.25% 6.32% 6.45% You invest $10,000 in a 270-day CD at a rate of 6%, compounded daily. What is the amount you receive at maturity? $10,460.24 $10,600.22 $11,200.35 $11,345.48XXX, 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?Carey Company is borrowing $250,000 for one year at 10.0 percent from Second Intrastate Bank. The bank requires a 18 percent compensating balance. The principal refers to funds the firm can utilize effectively (Amount borrowed - Compensating balance) a. What is the effective rate of interest? (Use a 360-day year. Input your answer as a percent rounded to 2 decimal places.) Effective rate of interest b. What would the effective rate be if Carey were required to make 12 equal monthly payments to retire the loan? (Use a 360-day year. Input your answer as a percent rounded to 2 decimal places.) Effective rate of interest
- Holland Construction Co. has an outstanding 180-day bank loan of $394,000 at an annual interest rate of 9.8%. The company is required to maintain a 13% compensating balance in its checking account. What is the effective interest rate on the loan? Assume the company would not normally maintain this average amount (Use 360 days in a year. Round your answer to 2 decimal places.) Multiple Choice 14.26% 1026% 13.26% 11:26%A company received a P 500,000 line of credit from its bank. Some information about the credit line is as follows: Stated interest rate 10% Compensating balance requirement 20% Assuming that the company drew down the entire amount at the beginning of the year, and that the loan is discounted, what is the effective interest rate on the loan?You have just received credit card applications from two banks, A and B. The interest terms on your unpaid balance are stated as fallows:1. Bank A: 20% compounded quarterly.2. Bank B: 19.5% compounded daily.Which of the following statements is incorrec1?(a) The effective annual interest rate for Bank A is 18.25%.(b)The nominal annual interest rate for Bank B is 19.5%.(c) Bank B's term is a better deal, because you will pay less interest on yourunpaid balance.(d) Bank A's term is a better deal, because you will pay less interest on yourunpaid balance.