Your firm is considering two one year loan options for a $541,000 loan...

Your firm is considering twoâ€‹ one-year loan options for a $ 541,000 loan. The first carries...

50.1K

Verified Solution

Question

Finance

Your firm is considering twoâ€‹ one-year loan options for a $541,000 loan. The first carries fees of 2.1% of the loan amount andcharges interest of 4.2% of the loan amount. The other carries feesof 1.8 % of the loan amount and charges interest of 4.7 % of theloan amount.
a. What is the net amount of funds from eachâ€‹ loan?
b. Based on the net amount ofâ€‹ funds, what is the true interestrate of eachâ€‹ loan?
a. What is the net amount of funds from eachâ€‹loan?
The net amount of funds for option 1 is â€‹$. â€‹(Round to thenearestâ€‹ dollar.)
The net amount of funds for option 2 is â€‹$. â€‹(Round to thenearestâ€‹ dollar.)
b. Based on the net amount ofâ€‹ funds, what is the trueinterest rate of eachâ€‹ loan?
The true interest for loan 1 will be %. â€‹(Round to threedecimalâ€‹ places.)
The true interest for loan 2 will be %. â€‹(Round to threedecimalâ€‹ places.)

Answer & Explanation Solved by verified expert

4.4 Ratings (687 Votes)

Given Loan Amount 541000 Option 1 Fees 21 Interest 42 Option 2 Fees 18 Interest 47 Option 1 Net Amount of Funds Loan Amount 1 Rate of Fees 541000 1 0021 529639 See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member