Question: Barcain Credit Corp wants to earn an effective annual return
Barcain Credit Corp. wants to earn an effective annual return on its consumer loans of 15 percent per year. The bank uses daily compounding on its loans. What interest rate is the bank required by law to report to potential borrowers? Explain why this rate is misleading to an uninformed borrower.
Relevant QuestionsWhat is the future value of $2,600 in 19 years assuming an interest rate of 7.9 percent compounded semiannually?You are planning to make monthly deposits of $400 into a retirement account that pays 10 percent interest compounded monthly. If your first deposit will be made one month from now, how large will your retirement account be ...What is the value today of $4,000 per year, at a discount rate of 10 percent, if the first payment is received 6 years from today and the last payment is received 20 years from today?This question illustrates what is known as discount interest. Imagine you are discussing a loan with a somewhat unscrupulous lender. You want to borrow $25,000 for one year. The interest rate is 13 percent. You and the ...Ninja Co. issued 14-year bonds a year ago at a coupon rate of 6.9 percent. The bonds make semiannual payments. If the YTM on these bonds is 5.2 percent, what is the current bond price?
Post your question