Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Anieta will receive $ 3 5 , 0 0 0 on her 2 2 nd birthday from a trust fund left to her by her

Anieta will receive $35,000 on her 22 nd birthday from a trust fund left to her by her grandmother. Anieta is a college student,
and has decided to borrow against the trust fund to cover the costs of tuition, room and board, books, and supplies. Since
she is currently 20 years old, Anieta will only need a 2-year loan. The following are the two loan proposals that Anieta is
considering and both require using the trust proceeds as collateral.
Tennessee State Bank will lend $30,000 with a 6% discount on interest. The loan principal would be due at the end of two
years. Key Bank will lend $25,000 under a 2-year note. The note would carry a 7% simple interest rate and would aho be due
n a single payment at the end of two years.
If Anieta requests a loan with Tennessee State Bank, a) How much will she receive in loan proceeds? b) What whll sht
be required to pay back at maturity? c) Compute the finance charges and APR on the Tennessee State Bankloan
proposal.
If Anieta requests a loan with Key Bank, a) How much will she receive in loan proceeds? b) What will she be reqt
to pay back at maturity? c) Compute the finance charges and APR on the Key Bank loan proposal.
Compare your findings. Which loan option would you recommend to Anieta? pleasse explain.
SLEM S
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cases In Financial Reporting

Authors: Ellen Engel, D. Eric Hirst, Mary Lea McAnally

8th Edition

1618531220, 9781618531223

More Books

Students also viewed these Finance questions