Question 1

If you borrow $5 million for 9 months, calculate your annual effective rate of interest to 2 decimal places under the following terms:

9% interest with a $50,000 lenders fee, both payable at the end of the loan period

Answer:

Question 2

If you borrow $5 million for 9 months, calculate your annual effective rate of interest to 2 decimal places under the following terms:

Discounted interest at a rate of 7.5%.

Answer:

Question 3

If you borrow $5 million for 9 months, calculate your annual effective rate of interest to 2 decimal places under the following terms:

$350,000 interest payable at the end of the loan period.

Question 4

If you borrow $5 million for 9 months, calculate your annual effective rate of interest to 2 decimal places under the following terms:

9% interest with a 10% compensating balance

Answer:

Question 5

If you borrow $5 million for 9 months, calculate your annual effective rate of interest to 2 decimal places under the following terms:

$350,000 interest payable at the beginning of the loan period ( discounted loan)

Answer:

Question 6

If you borrow $5 million for 9 months, calculate your annual effective rate of interest to 2 decimal places under the following terms:

9% interest with a compensating balance of $400,000.

Answer: Question 7

Compute the % cost of not taking the following trade discount to two decimal places:

2/10, net 45

Answer:

Question 8

Compute the % cost of not taking the following trade discount to two decimal places:

3/10, net 180

Question 9

Compute the % cost of not taking the following trade discount to two decimal places:

2/15, net 30

Answer:

Question 10

Compute the % cost of not taking the following trade discount to two decimal places:

2/10, net 40