CHAP 14 - 8

DROPDOWN OPTIONS ARE

1- 36,000 - 24,570 - 32,760 - 27,000

2- 273,000 - 267,240 - 300,000 - 327,000

3- 9.00% - 12.00% - 6.75% - 10.00%

4- 9.00% - 6.68% - 12.00% - 12.18%

5- 27,000 - 40,500 - 54,000 - 33,750

6- 300,000 - 450,000 - 600,000 - 375,000

7- 2.35% - 1.55% - 0.75 - 15.00%

8- 15.87% - 17.47% - 15.27% - 16.67%

8. Computing the cost of a simple interest loan Jamison Inc. needs to raise $300,000 for a nine-month term. Jamison's bank has offered to lend Jamison the money at a 12.00 % simple interest rate. Jamison will receive the $300,000 upon approval of the loan and will pay back the principal and interest at maturity. Calculate the interest payment, the amount of cash received, the annual percentage rate (APR), and the effeective annual rate (EAR) of this loan. Value Interest payment Amount of cash received Annual percentage rate (APR) Effective annual rate (EAR) Suppose the terms of the loan require that Jamison maintain a compensating balance equal to 20 % of the loan balance, and Jamison will have to borrow the compensating balance from the bank Calculate the interest payment, the amount of cash received, the annual percentage rate (APR), and the effective annual rate (EAR) of the loan considering the compensating balance requirement. Value Interest payment Amount of cash borrowed Annual percentage rate (APR) Effective annual rate (EAR))