Determine the semi-annual effective interest rate of loan

Reference no: EM132847179

Question - On 1 January 20x1, Feel makes a 3-year loan of $600,000 to Fancy Ltd ("Fancy") with an annual interest rate of 4% payable semi-annually at the end of June and December. Feel pays legal fees of $20,000 in relation to the preparation of the loan agreement. Feel has no intention to sell the loan, and intends to collect the interest and principal payments only. Feel receives all interest payments from Fancy in year 20x1.

From Feel's perspective, determine the semi-annual effective interest rate of the loan on 1 January 20x1.

Reference no: EM132847179

Questions Cloud

Summarize the sbc annual data : Use descriptive statistics to summarize the SBC annual data. Discuss findings.

How much will be her gross earnings : Anna's time record shows that she have work 38hr on a regular hourly rate of $300. How much will be her gross earnings

Determine the typical seasonal patterns for sales : Sales of roof material, by quarter, since 2005 for Carolina Home Construction Inc. are shown below (in $ thousands).

Discuss in terms of units of standard deviation : What does the z-score refer to? Suppose a student's z-score is 3.00

Determine the semi-annual effective interest rate of loan : On 1 January 20x1, Feel makes a 3-year loan of $600,000 to Fancy Ltd. Determine the semi-annual effective interest rate of the loan on 1 January 20x1

What is the z-score for a sample : If a population has a mean of 60 and a standard deviation of 12, what is the z-score for a sample of 25 people whose mean is 64.2

Find the theoretical market value of the bonds : Pacific Western Corporation pays a 11 percent coupon rate on debentures due in 25 years. Find the theoretical market value of the bonds

Difference in the extent of wound healing by treatment : Data are collected in a clinical trial evaluating a new compound designed to improve wound healing in trauma patients. The new compound is compared against

Body temperature of healthy human adults : -Only one of the confidence interval interpretations below is correct. Identify which is correct. For each incorrect interpretation, explain why that interpreta

User Account

All Pages