Question
Capel Inc. needs to raise $500,000 for a nine-month term. Capels bank has offered to lend Capel the money at a 20.00% simple interest rate.
Capel Inc. needs to raise $500,000 for a nine-month term. Capels bank has offered to lend Capel the money at a 20.00% simple interest rate. Capel will receive the $500,000 upon approval of the loan and will pay back the principal and interest at maturity.
Calculate the interest payment, the amount of cash received, the annual percentage rate (APR), and the effective annual rate (EAR) of this loan.
| Value | |
|---|---|
| Interest payment | |
| Amount of cash received | |
| Annual percentage rate (APR) | |
| Effective annual rate (EAR) |
Suppose the terms of the loan require that Capel maintain a compensating balance equal to 15% of the loan balance, and Capel will have to borrow the compensating balance from the bank.
Calculate the interest payment, the amount of cash received, the annual percentage rate (APR), and the effective annual rate (EAR) of the loan considering the compensating balance requirement.
| Value | |
|---|---|
| Interest payment | |
| Amount of cash borrowed | |
| Annual percentage rate (APR) | |
| Effective annual rate (EAR) |
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Capital Flows And Foreign Direct Investments In Emerging Markets
Authors: S. MotamenSamadian
1st Edition
1403991545,0230597963
