A bank makes a package of three loans to a small business. 

(a) $120,000 amortized monthly for ten years at a nominal discount rate of 6.8% convertible monthly. 

(b) $100,000 to be repaid by monthly sinking fund payments for ten years where interest is assessed at a rate of 5.4% nominal convertible monthly and the sinking fund carns 4% nominal interest convertible monthly. The bank receives the sinking fund deposits. 

(c) $200,000 to be repaid with interest at the end of ten years with an effective rate of discount of 8.2% throughout the ten years. 

Find the banks annual effective yield on cach of these loans individually and on the package of loans over the ten-year period.

Answer rating: 100% (QA)

1 The effective yearly interest rate is one that r... View the full answer