A hedge fund is considering making a 5-year $600,000, 9.5% APR, interest-only loan. They will get monthly
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A hedge fund is considering making a 5-year $600,000, 9.5% APR, interest-only loan. They will get monthly interest payments and the entire principal at the end of 5 years. Before making the loan, it will cost the fund $20,000 for due diligence, and after making the loan, it will cost the fund $500 per month for monitoring. Based on only the information above (to be even more clear, ignoring taxes), and assuming the borrower makes all the required payments on time, what APY interest rate does the fund expect to earn?
Related Book For
Principles Of Managerial Finance
ISBN: 978-0136119463
13th Edition
Authors: Lawrence J. Gitman, Chad J. Zutter
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