What is the APR of this loan and What is its EAR

Assignment Help Financial Management
Reference no: EM13721555

We Cheat U Loans offer to loan you $6,000 at 6% simple interest for a five-year period. In order to make it easier for you to pay, they take each year’s interest of $360 and add it to the $6,000 principal to get $7,800 ($6,000 + 5 x $360). Then, they spread this evenly over the sixty months to get your monthly payment of $130.00 ($7,800/60).

a. What is the APR of this loan; and

b. What is its EAR?

Reference no: EM13721555

Questions Cloud

What is the value of the long forward contract : A 2-year long forward contract on a non-dividend-paying stock is entered into when the stock price is $139 and the risk-free interest rate is 10.3% per annum with continuous compounding. 1 year later, the price of the stock is $146 and the risk-free ..
Calculate the equal quarterly series equivalent : Calculate the equal quarterly series equivalent to the decreasing gradient series given below. Assume the interest rate is 8%.
Stocks be to achieve the target required rate of return : Hazel Morrison, a mutual fund manager, has a $60 million portfolio with a beta of 1.00. The risk free rate is 3.25%, and the market risk premium is 6.00%. Hazel expects to receive an additional $40 million, which she plans to invest in additional sto..
What is the present value of the annuity : What is the present value of the following annuity $4323 every year at the end of each year for the next 6 years, discounted back to the present at 18.05 percent per year compounded annually
What is the APR of this loan and What is its EAR : We Cheat U Loans offer to loan you $6,000 at 6% simple interest for a five-year period. In order to make it easier for you to pay, they take each year’s interest of $360 and add it to the $6,000 principal to get $7,800 ($6,000 + 5 x $360).
Determine the annual percentage rate of increase for budget : The annual budget for a University Department has been increasing by the same percentage each year and is expected to continue to increase at this percentage rate annually for the foreseeable future. This year the budget is $1.65 million and two year..
What is the equivalent rate with semi annual compounding : An interest rate is 13.34% per annum expressed with continuous compounding. What is the equivalent rate with semi annual compounding? (Margin of error: +/- 0.01%)
Required an annual rate of return : LLT Company’s stock is currently selling for $105 per share. LLT just paid its annual dividend, so the next one won’t be paid until one year from today. If you required an annual rate of return of 15% on an investment in LLT’s common stock, what amou..
Options to be as profitable as an investment in the stock : The price of a stock is $25 and the price of a three-month call option on the stock with a $27 strike is $2.50. Suppose a trader has $2,500 to invest and is trying to choose between buying 1,000 options (10 contracts) or 100 shares of stock. How high..

Reviews

Write a Review

 

Financial Management Questions & Answers

  You are to select one business thatdoes not alreadyhave a

you are to select one business thatdoes not alreadyhave a websiteand develop an internet strategy for it. most large

  Analysis of investment dear sir madam can you please

dear sir madam ltbrgt ltbrgtcan you please provide me the attached solution plagiarism free. looking forward to hear

  Compute the npv if you sell the old machine

Calculate the NPV if you sell the old machine and buy new machine A. (Round up to the nearest dollar amount. DO NOT use $, commas, or decimal points) (Example $23,345.50 is entered as 23346)

  Draw policy conclusions from the barings case

Have global financial markets become safer or riskier thanks to the presence of derivative instruments? Elaborate your argument using financial and economic analysis

  Describe two of the biggest challenges facing financial

discuss two of the biggest challenges facing financial managers today. one of the articles should be about the

  Calculate payback period and internal rate of return (irr)

Company has an opportunity to make an investment with the estimated after tax cash flows

  Examine the criticality of timely information

Examine strategies for decision-making based on quantitative models and examine the criticality of timely information.

  Prepare the consolidated financial statements

Prepare all consolidation adjustment entries required to prepare the consolidated financial statements as at 30 June 2011.  Provide a brief heading for each adjustment that you prepare.

  Consider the recent performance of the closed fund a

consider the recent performance of the closed fund a closed-end fund devoted to finding undervalued thinly traded

  Determine the cost of equity based on capm

Determine the cost of equity based on CAPM? Compute the firm's WACC? Estimate the cash flow for each year of this project

  Discuss specific challenges that you may have experienced

determine the primary manner in which orion has increased your business knowledge in the related subject area.discuss

  Determine how large must each of the 5 payments be

To get the money for this payment, you will make 5 equal deposits, beginning today and for the following 4 quarters, in a bank that pays a nominal interest rate of 8% with quarterly compounding.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd