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- The employee credit union at State University is planning the allocation of funds for the coming year. The credit union makes four types of loans to its members. In addition, the credit union invests in risk-free securities to stabilize income. The various revenue-producing investments together with annual rates of return are as follows. Type of Loan/Investment Automobile loans Furniture loans Other secured loans Signature loans Risk-free securities ● How should the $2,400,000 Automobile loans Furniture loans Other secured loans Signature loans Risk-free securities to LA The credit union will have $2,400,000 available for investment during the coming year. State laws and credit union policies impose the following restrictions on the composition of the loans and investments. LA Annual Rate of Return (%) • Risk-free securities may not exceed 30% of the total funds available for investment. Signature loans may not exceed 10% of the funds invested in all loans (automobile, furniture, other…The employee credit union at State University is planning the allocation of funds for the coming year. The credit union makes four types of loans to its members. In addition, the credit union invests in risk-free securities to stabilize income. The various revenue-producing investments together with annual rates of return are as follows: Type of Loan/Investment Annual Rate of Return (%) Automobile loans 8 Furniture loans 10 Other secured loans 11 Signature loans 12 Risk-free securities 9 The credit union will have $2 million available for investment during the coming year. State laws and credit union policies impose the following restrictions on the composition of the loans and investments: Risk-free securities may not exceed 30% of the total funds…The employee credit union at State University is planning the allocation of funds for the coming year. The credit union makes four types of loans to its members. In addition, the credit union invests in risk-free securities to stabilize income. The various revenue-producing investments together with annual rates of return are as follows: Type of Loan/Investment Annual Rate of Return (%) Automobile loans 9. Furniture loans 11 Other secured loans 12 Signature loans 13 Risk-free securities 10 The credit union will have $2.3 million alailable for investment during the coming year. State laws and credit union policies impose the following restrictions on the composition of the loans and investments: • Risk-free securities may not exceed 30% of the total funds available for investment. • Signature loans may not exceed 10% of the funds invested in all loans (automobile, furniture, other secured, and signature loans). • Furniture loans plus other secured loans may not exceed the automobile…
- The employee credit union at State University is planning the allocation of funds for the coming year. The credit union makes four types of loans to its members. In addition, the credit union invests in riskfree securities to stabilize income. The various revenueproducing investments together with annual rates of return are as follows: Type of Loan/Investment Annual Rate of Return (%) Automobile loans 8 Furniture loans 10 Other secured loans 11 Signature loans 12 Riskfree securities 9 The credit union will have $2,000,000 available for investment during the coming year. State laws and credit union policies impose the following restrictions on the composition of the loans and investments.•Riskfree securities may not exceed 30% of the total funds available for investment.•Signature loans may…The employee credit union at State University is planning the allocation of funds for the coming year. The credit union makes four types of loans to its members. In addition, the credit union invests in risk-free securities to stabilize income. The various revenue-producing investments, together with annual rates of return, are as follows. Type of Loan/Investment Automobile loans Furniture loans Other secured loans Signature loans Risk-free securities $ ● Automobile loans The credit union will have $2,400,000 available for investment during the ng year. State laws and credit union policies impose the following restrictions on the composition of the loans and investments. Furniture loans Other secured loans • Risk-free securities may not exceed 30% of the total funds available for investment. Signature loans may not exceed 10% of the funds invested in all loans (automobile, furniture, other secured, and signature loans). Signature loans Risk-free securities • Furniture loans plus other…City Loans wants to earn an effective annual return on its consumer loans of 18.9 percent per year. The bank applies daily compounding. What interest rate is the firm required by law to report to potential borrowers? Can the excel and calculator solution be provided?
- Computing the cost of a discount interest loan The financial managers at Montross Corporation are arranging the financing for working capital requirements for the upcoming year. Montross’s local bank offers a discount interest loan at a quoted (simple) interest rate of 4.00%. With a discount interest loan, interest is payable up front, and the actual amount received is less than the face amount of the loan. Suppose Montross applies for a $200,000 loan with a nine-month term. Calculate the interest payment, the amount of cash received, the annual percentage rate (APR), and the effective annual rate (EAR) of this loan. (Fill In) Value Interest payment ________________ Amount of cash received ________________ Annual percentage rate (APR) ________________ Effective annual rate (EAR) ________________ What is the nine-month rate if the bank charges a $100 processing fee? Pick one choice. 3.15% 4.12% 3.05% 2.84%Your supervisor has tasked you with evaluating several loans related to a new expansion project. Using the PVIFA table (table 9.4 in the textbook), determine the annual payment on a $400,000, 8% business loan from a commercial bank that is to be amortized over a five-year period. Show your work. Does this payment seem reasonable? Explain.You are the loan department supervisor for a bank. This installment loan is being paid off early, and it’s your task to calculate the rebate fraction, the finance charge rebate (in $), and the payoff for the loan (in $). (Round to the nearest cent)
- OECS Bank has both a loans division and mutual funds division. It has allocated $40.0M to finance its loan portfolio. Its operations manager is asked to build an LP model to help guide company decisions as to how to disburse the revolving fund across different loan categories. The operations manager garnered the following data on available types of loans based on market research of the industry: Types of loan Interest rate Bad debt ratio Personal 0.15 .10 Car 0.20 0.04 Home 0.17 0.02 Small and medium enterprises 0.25 0.15 Commercial 0.10 0.02 The Bank’s net return is interest rate net of Bad debt. Revenue from interest is gained only from goodloans. d) Home loans must equal at least 50% of the personal, car and homes loans.e) The bank also has a stated policy of not allowing the overall ratio of bad debts on all loans to exceed 5 %. g) Generate the non-negative constraintOECS Bank has both a loans division and mutual funds division. It has allocated $40.0M to finance its loan portfolio. Its operations manager is asked to build an LP model to help guide company decisions as to how to disburse the revolving fund across different loan categories. The operations manager garnered the following data on available types of loans based on market research of the industry: Types of Loan Interest Rate Bad Debt Ratio Personal 0.15 .10 Car 0.20 0.04 Home 0.17 0.02 Small and medium enterprises 0.25 0.15 Commercial 0.10 0.02 The Bank’s net return is interest rate net of Bad debt. Revenue from interest is gained only from goodloans. a) Generate the objective function using your variables from aboveb) Generate the total budget constraintc) The bank allocates at least 45% of the funds to SMEs and Commercial loans. d) Home loans must equal at least 50% of the personal, car and homes loans.e) The bank also has a stated policy of not allowing the overall…Watch the Mathematics of Finance video and then answer the question given below. Simple interest loans are generally used for which type of loan? Click here to watch the video. Choose the correct description of a simple interest loan. A. Home Mortgage loans B. Short term loans of less than a year C. Car loans D. Long term loans of a year or more