your business requests a 3 - month loan for $500,000. what will be the interest paid at the end of the term…

your business requests a 3 - month loan for $500,000. 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 1.8%? interest paid = $? round to the nearest hundredth.

your business requests a 3 - month loan for $500,000. 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 1.8%? interest paid = $? round 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, $r=(2.0% + 1.8%)=3.8%=0.038$.

Step2: Adjust for the 3 - month term

The time $t$ is 3 months or $\frac{3}{12}=0.25$ years.

Step3: Calculate the interest

Use the simple - interest formula $I = P\times r\times t$, where $P = 500000$, $r = 0.038$, and $t=0.25$. So, $I=500000\times0.038\times0.25$. $I = 500000\times0.038\times0.25=4750$

Answer:

$4750.00$