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A bank manager is reviewing a loan file to determine its profitability. The file shows that the borrower made a total repayment of $55,000. To accurately calculate the lender's rate of return on this loan, which single piece of information is essential?
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Rate of Return and Loss in a Total Default Scenario
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A financial institution provides a loan of $20,000 to a client. At the end of the loan term, the client has paid back a total of $21,500. What was the financial institution's rate of return on this loan?
Comparing Loan Profitability
Calculating Required Loan Repayment
Evaluating Loan Profitability
A lender issues several loans, each with a principal of $10,000. Match each repayment scenario with the lender's resulting rate of return.
If a lender receives a total repayment that is exactly double the original amount of the loan, the rate of return on that loan is 200%.
A financial firm issues two different loans, Loan X and Loan Y, for the exact same principal amount. After one year, the total amount repaid for Loan X is greater than the total amount repaid for Loan Y. Based solely on this information, what can be concluded about the rates of return for the two loans?
A bank manager is reviewing a loan file to determine its profitability. The file shows that the borrower made a total repayment of $55,000. To accurately calculate the lender's rate of return on this loan, which single piece of information is essential?
A bank makes two separate loans. Loan A has a principal of $10,000 and is fully repaid with a single payment of $11,000. Loan B has a principal of $20,000 and is fully repaid with a single payment of $21,000. Both loans resulted in a net gain of $1,000 for the bank. Which of the following statements accurately compares the profitability of these two loans from the bank's perspective?
An investor provides a loan to a startup. At the end of the loan term, the total amount repaid by the startup is exactly 40% greater than the original amount of the loan. What is the investor's rate of return on this loan?