Find the bank annual effective yield

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Question - A bank makes a package of three loans to a small business:

(a) $120000 amortized monthly for ten years at a nominal interest rate of 6% convertible monthly.

(b) $100000 to be repaid by monthly sinking fund payments for ten years where interest is assessed at a rate of 5. 4% nominal convertible monthly and the sinking fund earns 4% nominal interest convertible monthly. The bank receives the sinking fund deposits.

(c) $200,000 to be repaid with interest at the end of ten years with an effective rate of interest of 8% throughout the ten years.

Required - Find the bank's annual effective yield on each of these loans individually and on the package of loans over the ten-year period.

Reference no: EM133106376

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