Question

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 2.8%?
inferest paid = $[?]

Answer 1

The interest paid at the end of the term for a 3-month $550,000 loan with a business risk percentage of 2.0% and a LIBOR rate of 2.8% is $6,600.

Step-by-step explanation:

To calculate the interest paid on a loan, you need to multiply the loan amount by the interest rate and the time period. In this case, the loan amount is $550,000 and the time period is 3 months. The interest rate is found by adding the business risk percentage (2.0%) to the LIBOR rate (2.8%) which gives a total interest rate of 4.8% (2.0% + 2.8%).

Now, we can calculate the interest paid using the formula: Interest = Loan Amount × Interest Rate × Time Period.

Using the given values, the interest paid at the end of the term would be:

Interest = $550,000 × 0.048 × rac{3}{12} = $6,600.