A bank has two 3-year commercial loans with a present value, Ask an Expert

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A bank has two, 3-year commercial loans with a present value of $80 million. The first is a $30 million loan that requires a single payment of $37.8 million in 3 years, with no other payments until then. The second is for $50 million. It requires an annual interest payment of $4.5 million. The principal of $50 million is due in 3 years. The general level of interest rates is 7%. What is the duration of the bank’s commercial loan portfolio?

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Financial Management, Finance

Category:- Financial Management
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