What is effective annual interest rate charged on such loan

Assignment Help Financial Management

Reference no: EM13730609

Question 1

Some home loans involve "points," which are fees charged by the lender. Each point charged means that the borrower must pay 1% of the loan amount as a fee. For example, if 0.5 point is charged on a $100,000 loan, the loan repayment schedule is calculated on the $100,000 loan, but the net amount the borrower receives is only $99,500. What is the effective annual interest rate charged on such a loan, assuming that loan repayment occurs over 360 months, and that the interest rate is 12% per year?

Question 2

One service provided by check cashing services is to cash your check the night before you could otherwise receive your money if you were to deposit it into a bank account. However, a fee is attached to this service.

Let’s say you were to bring your $500 pay check to receive your cash one day early, but you need to pay a $1 fee in order to do so (in other words, you receive $499). What is the APR you paid on this transaction? What is the APY?

Reference no: EM13730609

Questions Cloud

Work-related activity in which you have participated : Select one (1) work-related activity in which you have participated (either a successful or failed performance), and decide whether or not debriefing could have been an effective tool to improve the performance. Next, determine one (1) learning funct..

Explain how the cold war was fought by each superpower : Explain how the Cold War was fought by each superpower. Be sure to discuss not only tactics but also the point of view of each side, including each side's understanding.

The listed cas board members is with the boeing company : From the e-Activity, one of the listed CAS board members is with the Boeing Company, an international airline and aerospace company. Analyze two (2) possible extra-contractual motivators that Boeing might consider when bidding on future military cont..

Discuss glorious revolution including its political impact : Discuss the Glorious Revolution including its political impact in England and its effect on the English colonists within the New World.

What is effective annual interest rate charged on such loan : Some home loans involve "points," which are fees charged by the lender. Each point charged means that the borrower must pay 1% of the loan amount as a fee. For example, if 0.5 point is charged on a $100,000 loan, the loan repayment schedule is calcul..

What is the face value of the zero coupon bond : Assume that all agents are risk neutral, and that the risk-free rate is 3%. The economic conditions in the upcoming year can be either good or bad. The first project has low payoff volatility and the second project has a high payoff volatility. What ..

How have modern presidents backgrounds affected : How did Andrew Johnson's background, especially his experiences as a prewar politician, affect his Reconstruction position? How have modern Presidents' backgrounds affected their political positions?

How will you leverage employee evaluations to motivate : How will you leverage employee evaluations to motivate each of the three employees. Describe how the strategy selected connects to one or more of the motivational theories described in the text.

What was the flotation cost as a percentage of funds raised : The Raven Co. has just gone public. Under a firm commitment agreement, Raven received $17.30 for each of the 15 million shares sold. The initial offering price was $21.00 per share, and the stock rose to $23.40 per share in the first few minutes of t..

User Account

All Pages