Suppose you borrow Php 150, 000. You have arranged for 3 years (amortize) loan
with an interest rate of 8% annually
a. What will your monthly payment be?
b. What will be your total interest paid when the loan expires?
Answers
Answer:
3. Enfield plc's financial projections show an expected cash deficit in two months' time of $8 million, which will last for approximately three months. It is now I November 2004. The treasurer is concerned that interest rates may rise before I January 2005 , Protection is required for two months.
The treasurer can lock into an interest rate today, for a future loan. The company takes out a loan as normal, i.e. the rate it pays is the going market rate at the date the loan is taken out. It will then receive or pay compensation under the separate FRA to return to the locked-in rate.
A 2-5 FRA at 5.00 —4.70 is agreed.
• The agreement starts in 2 months' time and ends in 5 months' time.
• The FRA is quoted as simple annual interest rates for borrowing and lending, e.g.
5.00 -4.70.
• The borrowing rate is always the highest.
Calculate the interest payable if in two months' time the market rate is: (a) 7% or (b) 4%,
Explanation:
3. Enfield plc's financial projections show an expected cash deficit in two months' time of $8 million, which will last for approximately three months. It is now I November 2004. The treasurer is concerned that interest rates may rise before I January 2005 , Protection is required for two months.
The treasurer can lock into an interest rate today, for a future loan. The company takes out a loan as normal, i.e. the rate it pays is the going market rate at the date the loan is taken out. It will then receive or pay compensation under the separate FRA to return to the locked-in rate.
A 2-5 FRA at 5.00 —4.70 is agreed.
• The agreement starts in 2 months' time and ends in 5 months' time.
• The FRA is quoted as simple annual interest rates for borrowing and lending, e.g.
5.00 -4.70.
• The borrowing rate is always the highest.
Calculate the interest payable if in two months' time the market rate is: (a) 7% or (b) 4%,