Solution-What is the effective cost of this loan

What is the effective cost of this loan

Assignment Help Finance Basics

Reference no: EM131122115

U.S. Fax has been granted a loan from a commercial finance company for $1 million at a stated interest rate of 10 percent. The loan requires that interest payments be made at the end of each of the next five years. At the end of five years, the entire loan balance must be repaid. The finance company requires U.S. Fax to pay a $25,000 loan-processing fee at the time the loan is approved. What is the effective cost of this loan?

Reference no: EM131122115

Questions Cloud

Prepare an income statement statement of owners equity : Based on the data in Exercise 4-23, prepare an income statement, statement of owner’s equity, and balance sheet for Homeland Security Services Co.

Complete the following end of period spreadsheet : Homeland Security Services Co. offers security services to business clients. Complete the following end-of-period spreadsheet (work sheet) for Homeland Security ServicesCo.

Corporations are considered person in the law : Ever since the Ford Pinto case, Enron and now Murdoch there is an increasing number of laws passed that make corporations criminally responsible for their actions. The Supreme Court recently decided that because corporations are considered "a person"..

Enter the adjusting entries into the spreadsheet : Extend the adjusted trial balance amounts to the Income Statement columns and the Balance Sheet columns.Indicate the order in which the preceding steps would be performed in preparing and completing a spreadsheet

What is the effective cost of this loan : The loan requires that interest payments be made at the end of each of the next five years. At the end of five years, the entire loan balance must be repaid. The finance company requires U.S. Fax to pay a $25,000 loan-processing fee at the time the l..

Calculate the effective interest rate on this loan : A $1 million loan requires five end-of-year equal payments of $284,333. a. Calculate the effective interest rate on this loan. b. How much interest (in dollars) is paid over the life of this loan?

Structure the financing of the corporation : Joan comes to you five years later after choosing to start her own business. It has been successful and she now wants to go national. However, she needs capital. If you tell her to incorporate, how would you suggest that she structure the financing o..

Adjusting entries are journalized and posted to the ledger : Rearrange the following steps in the accounting cycle in proper sequence:

Barriers to success of control systems : At Panther Lighting Fixtures, employees were asked how the quality of its customer service could best be measured, and management then implemented a survey system based on the feedback. The company has overcome which of the following barriers to succ..

User Account

All Pages

What is the effective cost of this loan

Reference no: EM131122115

Reference no: EM131122115

Questions Cloud

Reviews

Write a Review

Finance Basics Questions & Answers

Financial reporting and analysis

A report on financial accounting

Describe the types of financial ratios

Differences between sole proprietorship and corporation

Prepare a cash budget statement

What are the implied interest rates

State pricing theory and no-arbitrage pricing theory

Small business administration

Effect of financial leverage

Evaluate the basis for the payment to the lender

Importance of opps, ipps, mpfs and dmepos

Time value of money

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT