Two loans generate approximately the same income

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Reference no: EM13808150

Assume that a customer borrows $230,000 for one year from your bank.

a. As a loan officer, you offer the customer the loan if they agree to pay $19,500 in interest, plus agree to pay the $230,000 back at the end of one year. What is the APR?

b. As an alternative you offer them a one-year, $230,000 discount loan at 9 percent interest. What is the APR?

c. Which of the two loans would make more money for the bank?

d. At what discount loan rate would the two loans generate approximately the same income?

Reference no: EM13808150

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