Calculate the annual interest rate compounded

Assignment Help Finance Basics
Reference no: EM132703656

A lender requires 3.1% as the compensation for deferred consumption and 1.4% as the compensation for default risk. The inflation rate is expected to be 1.2% and the lender charges 0.9% to compensate for unexpected inflation. All the rates are annual rates compounded continuously.

Calculate the annual interest rate compounded continuously the lender should charge on the loan.

Reference no: EM132703656

Questions Cloud

Explain society contains four main elements : Hirschi argues that the social bond a person maintains with society contains four main elements. List and discuss these four elements.
Determine the increase in the purchasing power : Determine the increase in the purchasing power at the end of 14 years after you take inflation into account.
Do you think that spell check on the computer has helped : Do you think that spell check on the computer has helped or hindered people in terms of their spelling abilities? Back up with specific information and examples
Explain the monetary approach : Could you explain the monetary approach in determining exchange rates?
Calculate the annual interest rate compounded : Calculate the annual interest rate compounded continuously the lender should charge on the loan.
Find the compensation rate for default risk : Find the compensation rate for default risk as an annual effective rate.
Estimate the change in price using the first-order modified : Estimate the change in price using the first-order modified approximation if the interest rate increases to 5.77%.
Estimate the price of the bond : Using the first order modified approximation, estimate the price of the bond if the yield to maturity increases to 3.1% annually.
Identify the requirements for the insanity plea : Identify the requirements for the insanity plea in your jurisdiction and contrast this with the M'Naghten standard, the Brawner standard.

Reviews

Write a Review

Finance Basics Questions & Answers

  Dscuss american eagles ability to finance its investment

the following data were taken from the 2009 and 2008 financial statements of american eagle outfitters. all dollars

  How many years will it take for john to reach his goal

If John's goal is to accumulate $250,000 in the account, how many years will it take for John to reach his goal

  Describe the conditions imposed by the european central bank

Describe the conditions imposed by the European Central Bank (ECB) when it provides credit to European country governments with debt repayment problems.

  The reasons for the medical malpractice problem

a. Explain the reasons for the medical malpractice problem in the United States. b. Identify several methods for reducing medical malpractice costs.

  Even if all companies in the world were to use ifrs what

even if all companies in the world were to use ifrs what are two obstacles to the worldwide comparability of financial

  How does value change if market required yield to maturity

How does the value change if the market's required yield to maturity on a comparable risk bond (i) increases to 10 percent or (ii) decreases to 6 percent?

  A company has the opportunity to bid for drilling rights

a company has the opportunity to bid for drilling rights for one year on a tract of land. the cost of extracting the

  For each of effects select the possible cause

In the project environment, cause-and-effect relationships are almost always readily apparent- For each one of the effects, select the possible cause or causes that may have existed to create this situation:-

  Determine payback period accounting for the present value

Determine the payback period accounting for the present value of future cash flow (ie. Present value calculations) Should the project be done?

  How much ron has accumulated

Ron has been investing $3, 500 at the beginning of each year for the past 17 years for his daughter's college education. How much has he accumulated assuming.

  Which of the following bonds poses the biggest risk

Which of the following bonds poses the biggest risk to Frank's investment goals? >20-year, 105 coupon bon that may be called in 10 years >30-year, 10% coupon bond >30-year, 0% coupon bond >20-year, 0% coupon bond > 20-year, 10% coupon bond.

  Charlotte crochet shoppe-wacc

The pretax cost of debt is 6.17 percent and the bonds sell for 97.8 percent of par. What is the firm's WACC if the tax rate is 39 percent?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd