Discuss cost of a short-term bank loan

Reference no: EM131488846

Question: (Cost of a short-term bank loan) Alex is considering getting a 6-months loan with a face value of $150,000 to build a new apartment. His current balance is $10,000 at a bank that offered an unsecured loan for 15 percent. The bank considers Alex as a reliable customer and decided not to ask for any additional compensation, but $10,000 should be deposited. Alex was offered a loan from another bank, where he does not have any transactions or any account, at 13 percent and compensation balance of 15 percent of the loan. If he accepts the second offer, Alex will need to transfer his $10,000 to the new bank, which costs him 1 percent of the total sum. Which offer do you think is more suitable for Alex? Why?

Reference no: EM131488846

Questions Cloud

Digital media as a means to influence individuals : Digital media has changed the ways ideas, information, and arguments in society are communicated both locally and globally.

What is the effective annual rate of interest to jvc : (Cost of factoring) A factor has agreed to lend the JVC Corporation working capital on the following terms: JVC's receivables average $100,000 per month.

Strategic growth needs of clients business : What are the strategic growth needs of your clients' business?

Define the identified critical step of research in your word : Identify the most important step in the student's guide to research that you would need in order to analyze bullying.

Discuss cost of a short-term bank loan : Alex is considering getting a 6-months loan with a face value of $150,000 to build a new apartment. His current balance is $10,000 at a bank that offered.

Create project plan for district four warehouse move project : Using the District4WarehouseMove WBS.xls provided, create a project plan for the District 4 Warehouse Move project. Use the PDF document, Project Plan Check.

Create an activity for each city in oman : In your application, you should create an activity for each city in Oman and includes the tourist places in that city with full description, pictures and video.

Calculate the standard deviations of the returns for goodman : Use the data given to calculate annual returns for Goodman, Landry, and the Market Index, and then calculate average annual returns for the two stocks .

Identify each of the given sources of short-term credit : (Terminology) Identify each of the following sources of short-term credit in terms of whether they are secured (include some type of collateral).

User Account

All Pages