What is the monthly payment on the add-on interest loan

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Reference no: EM132518680

Short-term financing through bank loans

Consider this case:

Gizmonic Institute Corp. needs to take out a one-year bank loan of $400,000 and has been offered several different terms. One bank has offered a loan with 12% simple interest that requires monthly payments. The loan principal will be paid back at the end of the year.

Question 1: Based on a 360-day year, what will be the monthly payment for June? (Hint: Remember that June has 30 days.)

$3,200.00
$4,000.00
$3,800.00
$3,600.00

Question 2: Another bank has offered 9% add-on interest to be repaid in 12 equal monthly installments. What is the monthly payment on this add-on interest loan?

$32,700.00
$36,333.33
$29,066.66
$34,516.66

Reference no: EM132518680

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