question text <u>WITH </u>missing information:
After examining the various personal loan rates available to you, you find that you can borrow funds from a finance company at an APR of <em>12 percent compounded monthly</em> or from a bank at an APR of <em>13 percent compounded annually.</em> Which alternative is more attractive?
If you borrow $100 from a finance company at an APR of 9% percent compounded for year, how much do you need to payoff the loan?
Answer:
The finance company option is better as we are taking the loan we want the lower rate possible.
We need $109 to payoff the loan of $100 at 9% annualy after a whole year.
Explanation:
We solve for the effective rate of 12% compounded monthly
= 1.12682503 = 0.126825 = 12.6825%
As this rate is lower than 13% this option is better
If we take 100 dollars after a year we have to pay:
$100 x (1 + r) = 100 x (1 + 0.09) = 100 x 1.09 = $109
I'm sorry but I don't know the answer.
I think Google would help you!
Coupon rate on the bonds can be calculated in the following way.
Explanation:
To find the coupon rate of the bond. All we need to do is to set up the bond pricing equation and solve for the coupon payment as follows:
P = $958 = C(PVIFA₆.₄₀%,11) + $1,000(PVIF₆.₄₀%,11)
Solving for the coupon payment, we get:
C = $58.57
The coupon payment is the coupon rate times par value. Using this relationship, we get:
Coupon rate = $58.57/$1,000
Coupon rate = .0586, or 5.86%
Calculator Solution:
Enter 11 6.40 ±$958 $1000
N l/Y PV PMT FV
$58.57
Coupon rate = $58.57/$1,000
Coupon rate = .0586, or 5.86%
Based on the provisions of the swap, Party A will pay $6,000 and receive $8,000.
<h3>How much will Party A pay?</h3>
Party A will pay the total return of 6% on the equity index capital:
= 6% x 100,000
= $6,000
<h3>How much will Party A receive?</h3>
Party A is to receive the rate of LIBOR + 3%. LIBOR is 5% so Party A will receive:
= 5% + 3%
= 8%
Total return is:
= 8% x 100,000
= $8,000
In conclusion, Party A will pay $6,000 and receive $8,000.
Find out more on LIBOR at brainly.com/question/26033099.
