Citizens' Bank of Business commercial loans are currently posted as having an 8.50% APR, with monthly payments due over a three-year period
If your firm takes out a $25,000 loan, what is the monthly payment, and what is the EAR? Use a financial calculator to determine your answer.
What will be an ideal response?
Answer:
Mode: P/Y=12, C/Y=12
Input: 36 8.5 -25,000 ? 0
Key: N I/Y PV PMT FV
CPT: 789.19
and the effective annual rate of this 8.5% APR is:
EAR = (1 + 0.085/12)12 - 1 = 8.84%
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