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 2.1%?\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 2.1%?\ninterest paid = $?\nround to the nearest hundredth.

Answer

Explanation:

Step1: Calculate the interest rate

The total interest rate is the sum of the business - risk percentage and LIBOR. So, the interest rate $r=(2.0% + 2.1%)=4.1%=0.041$.

Step2: Adjust for the 3 - month term

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

Step3: Calculate the interest paid

The formula for simple interest is $I = P\times r\times t$, where $P$ is the principal amount, $r$ is the interest rate, and $t$ is the time. Here, $P = 550000$, $r=0.041$, and $t = 0.25$. So, $I=550000\times0.041\times0.25$. $I = 550000\times0.041\times0.25=550000\times0.01025 = 5637.50$

Answer:

$5637.50$