your business requests a 5-month loan for $480,000. what will be the interest paid at the end of the term if…

your business requests a 5-month loan for $480,000. what will be the interest paid at the end of the term if the business risk percentage is assessed at 1.9% and libor is at 3.3%?\ninterest paid = $?\nlet: \\(\\frac{5\\text{ months}}{1\\text{ year}} = \\frac{150\\text{ days}}{365\\text{ days}}\\)\nround to the nearest hundredth.

your business requests a 5-month loan for $480,000. what will be the interest paid at the end of the term if the business risk percentage is assessed at 1.9% and libor is at 3.3%?\ninterest paid = $?\nlet: \\(\\frac{5\\text{ months}}{1\\text{ year}} = \\frac{150\\text{ days}}{365\\text{ days}}\\)\nround to the nearest hundredth.

Answer

Explanation:

Step1: Calculate total interest rate

The total interest rate is the sum of the business risk percentage and LIBOR. So, (1.9% + 3.3% = 5.2%) or (0.052) in decimal.

Step2: Determine time factor

The loan is for 5 months, which is (\frac{150}{365}) of a year (as given).

Step3: Calculate interest

Use the simple interest formula (I = P \times r \times t), where (P = 480000), (r = 0.052), and (t=\frac{150}{365}). [ \begin{align*} I&= 480000\times0.052\times\frac{150}{365}\ &= 480000\times0.052\times0.4109589\ &= 480000\times0.02137086\ &\approx 10257.99 \end{align*} ]

Answer:

(10257.99)