your business requests a 3 - month loan for $450,000. what will be the interest paid at the end of the term…

your business requests a 3 - month loan for $450,000. 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%? interest paid = $? round to the nearest hundredth.

your business requests a 3 - month loan for $450,000. 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%? interest paid = $? round 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 interest for 3 - months

The time $t$ in years for a 3 - month loan is $t=\frac{3}{12}=0.25$ years. The principal amount $P = 450000$. Using the simple - interest formula $I=P\times r\times t$, we substitute the values: $I = 450000\times0.048\times0.25$. $I=450000\times0.048\times0.25 = 450000\times0.012=5400$.

Answer:

$5400.00$