Given the following information: Item Bank A Bank B Loan Amount (1) $860.74 $860.74 Contractual Rate (2) 15.74% 17.40% Conversion Periods (3) 4 1 Life of Loan (years) (4) 4 4 Method of Payment (5) Fully Amort. Fully...

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Finance

Given the following information:
Item
Bank A
Bank B
Loan Amount
(1)
$860.74
$860.74
Contractual Rate
(2)
15.74%
17.40%
Conversion Periods
(3)
4
1
Life of Loan (years)
(4)
4
4
Method of Payment
(5)
Fully Amort.
Fully Amort.
Fee
(6)
No
No
Stock Requirement
(7)
No
No
Calculate the APR at Bank A.
            a.         2.73%                          b.       15.74%
            c.          14.07%                       d.         2.56%
Enter Response Here:
(ii)       Calculate theeffective rate at Bank A.
            a.         3.11%              b.       16.69%
            c.          2.59%             d.         14.83%
Enter Response Here:
(iii)      Calculate the APR at BankB.
            a.         11.87%                       b.         2.56%
             c.        17.40%                       d.         14.07%
Enter Response Here:
(iv)      Calculate the effectiverate at Bank B.
            a.        17.40%                       b.         14.07%
            c.          18.33%                       d.         2.42%
Enter Response Here:
(v)       Which bank offer theleast cost loan?
            a.        A                      b.         B
Enter Response Here:

Answer & Explanation Solved by verified expert

3.6 Ratings (469 Votes)

a Annual cost of amount borrowed is represented by the APR APR includes contractual rate of loan and also other fees and charges associated with loan It does not take into consideration compounding Bank A does not have See Answer

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Transcribed Image Text

Given the following information:ItemBank ABank BLoan Amount(1)$860.74$860.74Contractual Rate(2)15.74%17.40%Conversion Periods(3)41Life of Loan (years)(4)44Method of Payment(5)Fully Amort.Fully Amort.Fee(6)NoNoStock Requirement(7)NoNoCalculate the APR at Bank A. a. 2.73% b. 15.74% c. 14.07% d. 2.56%Enter Response Here:(ii) Calculate theeffective rate at Bank A. a. 3.11% b. 16.69% c. 2.59% d. 14.83%Enter Response Here:(iii) Calculate the APR at BankB. a. 11.87% b. 2.56% c. 17.40% d. 14.07%Enter Response Here:(iv) Calculate the effectiverate at Bank B. a. 17.40% b. 14.07% c. 18.33% d. 2.42%Enter Response Here:(v) Which bank offer theleast cost loan? a. A b. BEnter Response Here:

Item		Bank A	Bank B
Loan Amount	(1)	$860.74	$860.74
Contractual Rate	(2)	15.74%	17.40%
Conversion Periods	(3)	4	1
Life of Loan (years)	(4)	4	4
Method of Payment	(5)	Fully Amort.	Fully Amort.
Fee	(6)	No	No
Stock Requirement	(7)	No	No