Question
Johnny has got a four-year loan for $400,000. The effective annual rate (EAR) of the loan at the end of year 4 is 10%. The
Johnny has got a four-year loan for $400,000. The effective annual rate (EAR) of the loan at the end of year 4 is 10%. The interest rates for years 1 to 4 are 8.5%, 9.0%, 9.5% and 10%, respectively. Express your numerical answers in two decimal places.
What is Johnny's role in this deal?
Receiver Counter-party Payer Observer None of the options
The EAR for the first year is ____%.
The EAR for year 2 to year3 is ____%
The zero-coupon bond price of year 2 is ____%.
The zero-coupon bond price of year 4 is ____%.
What is the swap payment of year 3?
The swap interest rate is ____.
If Johnny pays $340,000 to the lender at the end of year 1, how much does he have to pay the counter-party?
How much is the present value of all the interest Johnny has to pay in four years?
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Johnny is the receiver of the loan The EAR for the first year is EAR 1 APRnn 1 where APR is the annual percentage rate and n is the number of compound...Get Instant Access to Expert-Tailored Solutions
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Principles of Finance
Authors: Scott Besley, Eugene F. Brigham
6th edition
9781305178045, 1285429648, 1305178041, 978-1285429649
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