1. Data Back-Up Systems has obtained a $10,000, 90-day discounted bank loan at an annual interest rate of 14%, payable a
Posted: Sun May 29, 2022 6:30 pm
1. Data Back-Up Systems has obtained a $10,000, 90-day
discounted bank loan at an annual interest rate of 14%, payable at
maturity.
a. How much interests (in dollars) will the firm pay on the
60-day loan?
b. Find the effective 90-day rate on the loan.
c. Annualize your result in part b to find the effective annual
rate for this loan, assuming that it is rolled over every 90 days
throughout the year under the same terms and circumstances.
discounted bank loan at an annual interest rate of 14%, payable at
maturity.
a. How much interests (in dollars) will the firm pay on the
60-day loan?
b. Find the effective 90-day rate on the loan.
c. Annualize your result in part b to find the effective annual
rate for this loan, assuming that it is rolled over every 90 days
throughout the year under the same terms and circumstances.