Your firm is considering two one-year loan options for a $531,000 loan. The first carries fees of
Question:
Your firm is considering two one-year loan options for a $531,000 loan. The first carries fees of 1.9% of the loan amount and charges interest of 4% of the loan amount.
The other carries fees of 1% of the loan amount and charges interest of 4.1% 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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Loan Analysis a Net Amount of Funds Loan 1 Loan amount 531000 Fee rate 19 Interest rate 4 Fee amount ...View the full answer
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Related Book For 
Fundamentals Of Corporate Finance
ISBN: 9781292437156
5th Global Edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
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