your business requests a 3 - month loan for $550,000. what will be the interest paid at the end of the term…

your business requests a 3 - month loan for $550,000. what will be the interest paid at the end of the term if the business risk percentage is assessed at 2.0% and libor is at 2.8%?\ninterest paid = $?\nround to the nearest hundredth.

your business requests a 3 - month loan for $550,000. what will be the interest paid at the end of the term if the business risk percentage is assessed at 2.0% and libor is at 2.8%?\ninterest paid = $?\nround to the nearest hundredth.

Answer

Explanation:

Step1: Calculate the annual interest rate

The annual interest rate $r$ is the sum of the business - risk percentage and LIBOR. So $r=(2.0% + 2.8%)=4.8%=0.048$.

Step2: Calculate the time in years

The loan term is 3 months. Since there are 12 months in a year, $t=\frac{3}{12}=0.25$ years.

Step3: Calculate the interest paid

The simple - interest formula is $I = P\times r\times t$, where $P = 550000$, $r = 0.048$, and $t = 0.25$. So $I=550000\times0.048\times0.25$. $I = 550000\times0.012$. $I = 6600.00$.

Answer:

$6600.00$