Question
AKWebDevelopersalso needs to raise$2,000,000 inshort-termloans for working capital needs. Whichof thefollowingloan offers should itaccept? a. Interbankoffers an annualpercentagerate of 6%,butAKmust repay the loanintwelve equal monthlyinstallments.ThisarrangementisacceptabletoAKbecause
AKWebDevelopersalso needs to raise$2,000,000 inshort-termloans for working capital needs. Whichof thefollowingloan offers should itaccept? a. Interbankoffers an annualpercentagerate of 6%,butAKmust repay the loanintwelve equal monthlyinstallments.ThisarrangementisacceptabletoAKbecause the need for working capital willdeclineduringthe year. Compute the monthly payment and theEARfor thisloan. b. Bancnet offersaone-yearloandiscountedat 6%.How much wouldAKneed to borrow to meet itsinitialneed for$2,000,000?What is the EARfor thisloan? c. WebsterBank offersaone-yearloan at6%addoninterestwithacompensatingbalance of10%. How much wouldAKneed to borrow to meet itsinitialneed for$2,000,000?What is theEAR for thisloan?
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a Interbank offers an annual percentage rate APR of 6 with repayment in twelve equal monthly installments To compute the monthly payment and the Effec...
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Financial Management Core Concepts
Authors: Raymond M Brooks
2nd edition
132671034, 978-0132671033
