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 2.2% and libor is at 1.8%?\ninterest paid = $?\nround 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 2.2% and libor is at 1.8%?\ninterest paid = $?\nround to the nearest hundredth.

Answer

Explanation:

Step1: Calculate the interest rate

The interest rate is the sum of the business - risk percentage and LIBOR. So, the interest rate $r=(2.2% + 1.8%)=4%=0.04$.

Step2: Calculate the time in years

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

Step3: Calculate the interest paid

The simple - interest formula is $I = P\times r\times t$, where $P$ is the principal amount, $r$ is the interest rate, and $t$ is the time. Here, $P = 450000$, $r = 0.04$, and $t = 0.25$. So, $I=450000\times0.04\times0.25$. $I = 450000\times0.01=4500.00$

Answer:

$4500.00$