Question

The Company "The best option" decided to renew its security equipment valued at S/ 150,000 and financed it with the Bank "BC Banco" through a promissory note. The conditions of the loan granted were as follows: Interest Rate: 20% effective annual rate. (TORCH) Total term: 18 months Administration Expenses: S/ 120 at the beginning of the operation. Commission: 2.5% of the amount requested as a loan. Withholding: 10% of the principal or loan, this will be returned at the end of the agreed term, without earning any interest. Payment method: Equal semi-annual installments. Delinquency Commission: S/ 10,000 is only paid after the agreed deadlines. As part of your financial decision: a) Indicate the amount that the company should have requested as a loan from the Bank to obtain the net S/ 150,000 necessary to purchase the security equipment, thus avoiding any contingency without exception that may arise. b) What would be the total cost that the company would have to pay, lower these conditions. Note: TEA Annual effective rate a

Answer 1

Total amount to be requested as loan to avail net S/150000 by ."best option " is ;

Let total amount requested as loan by bestoption is treated as 'X',

X = S/150000+ S/120+0.025X+0.1X+S/10000

X-0.025X-0.1X = S/160120

0.875X=S/160120

X=182994.286

Total amount to be requested by " bestoption" go avail a net bank loan of S/150000 is S/182995 (approx)

  

2 . Total cost borne by the bestoption to avail the loan is :

Calculation of equal semi annual payments is

Total amount requested by the best option is S/182,995

Interst rate is 20% per annum  

Total amount to be paid by the company after 18 months is

182995(1+20℅\2) ^3

=182995×1.331 = 243566

Let Equal semi annual installment is = P×r×(1+r) ^n÷(1+r) ^n -1

r= 20℅÷2 = 10% as it is semi annual payments

P= principal =182995

n=3 installment

182995×10%×(1+10%) ^3 ÷ (1+10%) ^3 -1

= 24356÷0.331=73585 equal installment semi annual

Total cost borne by the company due to lowering conditions is 120+ 10000+182995×2.5%+5489.85(note)

=20184.725

Note. Lost of interstbdue to with holding is 182995×10%×20%×18/12= 5489.85