FIN 550 Week 9
bryjnsah87
21-6-GB.xlsx21-6
| Some background information for the problem: | |||||||||||
| Loan rates are as follows: | |||||||||||
| days | 90 | 0.046 | |||||||||
| days | 180 | 0.0475 | |||||||||
| days | 270 | 0.05 | |||||||||
| days | 360 | 0.053 | |||||||||
| Loan amount: | $ 1,000,000.00 | ||||||||||
| 6.a asks you to determine the amount of interest you would pay to the bank, | |||||||||||
| if the interest rates perform as predicted. To do this, you need to determine the | |||||||||||
| effective interest rate. You will use the calculations beginning at the bottom of | |||||||||||
| page 797, and continuing into the next page. | |||||||||||
| The effective rates are going to be: | |||||||||||
| difference between 90 and 0 days | 0.046 | ||||||||||
| difference between 180 and 90 days | 0.0484429066 | ||||||||||
| difference between 270 and 180 days | 0.0543545398 | ||||||||||
| difference between 360 and 270 days | 0.0612345679 | ||||||||||
| Cash flow to bank for the $1,000,000 loan | |||||||||||
| 90 days | $ 11,500.00 islan_000: islan_000: This is the answer to 6a. The dollar level of interest paid | 1.0115 islan_000: islan_000: This is the bottom half of the annuity fomula. This is repeated for 180 through 360 days. |
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| 180 days | $ 12,110.73 | 1.02375 | |||||||||
| 270 days | $ 13,588.63 | 1.0375 | |||||||||
| 360 days | $ 15,308.64 | 1.053 | |||||||||
| $ 52,508.00 | 4.12575 | ||||||||||
| Annuity value | $ 12,726.90 islan_000: islan_000: The following are the answers to 6c |
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islan_000: islan_000: This is the answer to 6a. The dollar level of interest paid |
islan_000: islan_000: This is the bottom half of the annuity fomula. This is repeated for 180 through 360 days. | Percentage rate: | 5.09% |
