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 2.1%? 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 2.1%? 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 $r=(2.0% + 2.1%)=4.1%=0.041$.

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 $P = 450000$, $r = 0.041$, and $t = 0.25$. So $I=450000\times0.041\times0.25$. $I = 450000\times0.041\times0.25=450000\times0.01025 = 4612.50$.

Answer:

$4612.50$