A $1 million loan requires five end-of-year equal payments of $284,333. a. Calculate the effective interest rate

Question:

A $1 million loan requires five end-of-year equal payments of $284,333.
a. Calculate the effective interest rate on this loan.
b. How much interest (in dollars) is paid over the life of this loan?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Contemporary Financial Management

ISBN: 9780324289114

10th Edition

Authors: James R Mcguigan, R Charles Moyer, William J Kretlow

See More Books

Question Posted: Jul 17, 2012 04:20 AM

See More Questions

Calculate the effective interest rate on loans with the following minimum compensating balancerequirements: Loan Rate Compensating Balance b. C. d. 6.5% 12.0% 10.5% 14.0% 8.5% 20% 10% 15% 25% 30%
The effective interest rate on your credit card is 35 percent. What is the equivalent nominal interest rate if interest compounds daily? (EFF)
Shanquayle Jenkins needs to calculate the effective interest rate of a simple discount note for $19,750, at an ordinary bank discount rate of 7.82%, for 90 days. Find the effective rate rounded to...
Pohle Designs has a department that makes high-quality leather cases for iPads. Consider the following data for a recent month: Budget Formula per Unit Various Levels of Output 10.000 1.000 12000...
Refer to the information for Aulman Inc. below. Aulman Inc. has a number of divisions, including a Furniture Division and a Motel Division. The Motel Division owns and operates a line of budget...
Accounting Today reported that 37% of accountants purchase their computer hardware by mail order direct and that 54% purchase their computer software by mail order direct. Suppose that 97% of the...
This exercise considers nursing home data provided by theWisconsin Department of Health and Family Services (DHFS).The State of Wisconsin Medicaid program funds nursing home care for individuals...
Circular copper rod of diameter D = 1 mm and length L = 25 mm are used to enhance heat transfer from a surface that is maintained at Ts.1 = 100C. One end of the rod is attached to this surface (at x...
Adjustment for Uncollectible Accounts Below is the aging of receivables schedule for Evers Industries. Aging-of-Receivables Schedule November 30 Not 1-30 31-60 61-90 Over 90 Past Days Days Customer...
The graph shows the heights of mothers and daughters. a. As the data are graphed, which is the independent variable and which the dependent variable? b. From the graph, approximate the predicted...
The James Company has been offered a 4-year loan from its bank in the amount of $100,000 at a stated interest rate of 10 percent per year. The loan will require four equal end-of-year payments of...
U.S. Fax has been granted a loan from a commercial finance company for $1 million at a stated interest rate of 10 percent. The loan requires that interest payments be made at the end of each of the...
During the year ended December 31, 2017, Anderson Hospital (operated as a private not-for-profit entity) received and incurred the following: Fair value of donated medicines . . . . . . . . . . . . ....
Kays Hardware Ltds budgeted monthly sales for January to June 2019 are given below. About 70% of the monthly sales are expected to be on credit. Approximately 60% of the credit sales are collected in...
The accountant for Schulz Ltd compiled the following figures in order to estimate budgeted cash payments for March and April 2019. Schulz Ltd uses the following assumptions when preparing budgets....
Overton Pty Ltd is a private company that runs a coffee shop. Its owner, Carl, is concerned that the cash flows for the past year have deteriorated and has provided the following abridged versions of...
The March 2019 bank statement of Tongs Toyworld has just been received from its bankers. The following information is available. 1. The March bank column totals of the cash receipts and cash payments...
Greenvale Ltd sold some property to Thornleigh Ltd for $1 000 000 cash in June 2020, recording a profit of $200 000. A further element of the sale was that Greenvale Ltd gave Thornleigh Ltd an option...
REI, a national retail co-op selling high-quality outdoor adventure gear and apparel, has built its brand identity on making outdoor adventures more accessible. The companys #OptOutside 2015 Black...
Test whether the 5-year survival rate for breast cancer is significantly different between African American and Caucasian women who are younger than 50 years of age and have localized disease....
How are people who refuse to vaccinate protected by those who do get vaccinated?
Why do financial notes accompany the annual report? Give an example of a financial note from an annual report.
From the balance sheet accounts listed below: a. Construct a balance sheet for 2010 and 2011. b. List all the working capital accounts. c. Find the net working capital for the years ending 2010 and...
From the income statement accounts on the next page: a. Produce the income statement for the year b. Produce the operating cash flow for the year Income Statement Accounts For the Year Ending 2011...
On January 2, 20Y4, Whitworth Company acquired 33% of the outstanding stock of Aloof Company for $330,000. For the year ended December 31, 20Y4, Aloof Company earned income of $86,000 and paid...
2 If tan 08, sin 0 <0, find the exact value of each of the following for 00 <2x (a) sin (20) 0 (b) cos (20) (c) sin 2 (d) cos 2 (a) sin (20)= (Type an exact answer, using radicals as needed.) (b) cos...
Suppose you invest 52%, 28%, and 20% of your wealth into a stock, the market, and a risk-free asset, respectively. The beta of the stock is 1.1. What is the beta of the portfolio?

A $1 million loan requires five end-of-year equal payments of $284,333. a. Calculate the effective interest rate

Question:

Step by Step Answer:

a 1000000 284333PVIFA i5 PVIFA 3517 From Table IV i 13 b Principal Year ...View the full answer

Contemporary Financial Management

Students also viewed these Finance questions