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Your firm is considering a one-year loan for $522,000. The fees are 2% of the loan amount and the interest rate is 4.3%. First, compute the net amount of funds from the loan. Based on this net amount, what is the true interest rate of the loan

Respuesta :

Answer:

net amount = $511560

true interest rate = 4.39 %

Explanation:

given data

loan amount = $522000

fee = 2%

interest rate = 4.3%

solution

first we get here net amount that is

net amount = loan amount × ( 100 - fee)    ............1

net amount = $522000 × ( 100% - 2%)

net amount = $511560

and

true interest rate of the loan will be

interest rate = ( loan amount ×  interest rate ) ÷ net amount    ........2

interest rate = [tex]\frac{522000\times 0.043}{511560}[/tex]

interest rate = 4.39 %

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