Asked by Angelina Carbonell on May 26, 2024
Verified
Giuliani Co.lends $524,210 to Craig Corporation.The terms of the loan require that Craig make six semiannual period-end payments of $100,000 each.What semiannual interest rate is Craig paying on the loan?
Semiannual Period-end Payments
Payments made twice a year, often related to financial instruments like bonds or loans.
Semiannual Interest Rate
The interest rate applied to a financial instrument such as a loan or bond twice a year.
- Comprehend the basic principles of loans and interest rates, encompassing the computation of loan repayments and the aggregate sums borrowed.
- Integrate the notions of semiannual and annual compound interest in the realm of financial computation.
Verified Answer
AB
Alana BursonMay 29, 2024
Final Answer :
4% semi-annual rate
Present Value of an Annuity = Annuity * Interest Factor
$524,210 = $100,000 * Interest Factor; Interest Factor = 5.2421
5.2421 is the interest factor on the Present Value of an Annuity table; n = 6; i = 4%
Craig is paying a 4% semi-annual rate or an 8% annual rate of interest
Present Value of an Annuity = Annuity * Interest Factor
$524,210 = $100,000 * Interest Factor; Interest Factor = 5.2421
5.2421 is the interest factor on the Present Value of an Annuity table; n = 6; i = 4%
Craig is paying a 4% semi-annual rate or an 8% annual rate of interest
Learning Objectives
- Comprehend the basic principles of loans and interest rates, encompassing the computation of loan repayments and the aggregate sums borrowed.
- Integrate the notions of semiannual and annual compound interest in the realm of financial computation.