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    Data Back-Up Systems: interest calculations for 90 day loan

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    Data Back-Up Systems has obtained a $10,000, 90-day bank loan at an annual interest rate of 15%, payable at maturity. Assume a 365-day year.

    1. How much interest (in dollars) will the firm pay on the 90-day loan?
    2. Find the effective 90-day rate on the loan.
    3. Annualize your result in part b to find the effective annual rate for this loan, assuming that it is rolled over every 90 days throughout the year under the same terms and circumstances.

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    1. Interest Paid = Loan Amount*Interest Rate*Number of ...

    Solution Summary

    The solution determines interest calculations for a 90 day loan.