Effective annual rate of loans


Venture capital required rate of return. Blue Angel Investors has a success ratio of 10% with its venture funding. Blue Angel requires a rate of return of 20% for its portfolio of lending, and the average length on its loan is five years. If you were to apply to Blue Angel for a $100,000 loan, what is the annual percentage rate you would have to pay for this loan?

Straight bank loan. Left Bank has a standing rate of 8% (APR) for all bank loans and requires monthly payments. What is the monthly payment if a loan is for (a) $100,000 for five years, (b) $250,000 for ten years, or (c) $1,000,000 for twenty-five years? What is the effective annual rate of each of these loans?

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Finance Basics: Effective annual rate of loans
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