Company A has a loan agreement under which it can borrow at a rate of 1.50% p.a. above the BKBM. Suppose the six-month BKBM rate is 2.50% p.a., and that the company borrows $10,000,000. What is the effective interest rate and the amount of interest that will be due in six months time?

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BlackTom AI · Accepted Answer

First, identify the components of the loan's interest rate: the base BKBM rate plus the additional margin. The six-month BKBMRate given is 2.50% p.a., and the loan carries a margin of 1.50% p.a. above BKBM. Combining these yields an effective interest rate of 2.50% + 1.50% = 4.00% per year (p.a.).

Next, determine the amount of interest due in six months on the borrowed principal of $10,000,000. Since the rate is annual, the six-month period corresponds to half a year. The interest for six months is calculated as: Principal × Annual rate × (months / 12) = 10,000,000 × 0.04 × (6/12) = 10,000,000 × 0.04 × 0.5 = 10,000,000 × 0.02 = 200,000.

Therefore, the effective interest rate is 4% per year, and the interest due in six months is $200,000. Note that if there were any additional fees or compounding considerations not specified, those could alter the total amount due, but with the information given, the calculation above is correct.

Company A has a loan agreement under which it can borrow at a rate of 1.50% p.a. above the BKBM. Suppose the six-month BKBM rate is 2.50% p.a., and that the company borrows $10,000,000. What is the effective interest rate and the amount of interest that will be due in six months time?单项选择题

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A customer of a bank has $275,000 in surplus funds that need to be invested for a short period of time. The bank offers to sell a 90-day negotiable certificate of deposit (CD) to the customer at a yield of 6.45 per cent per annum. Advise the customer of the dollar return on the CD.

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