Twin brother and sister, Carl and Christy graduated several years ago from colle

Question

Twin brother and sister, Carl and Christy graduated several years ago from college. Carl, an architect, has worked in home design with Bulte Homes since graduation. Christy, a civil engineer, works with Butler Industries in structural components and analysis. They both reside in Richmond, Virginia. They have started a creative e-commerce network through which Virginia-based builders can buy their “spec home” plans and construction materials much more cheaply. Carl and Christy want to expand into a regional e-business corporation. They have gone to the Bank of America (BA) in Richmond for a business development loan. Identify some factors that might cause the loan rate to vary when BA provides the quote. Also, indicate any impact on the established MARR when Carl and Christy make economic decisions for their business.

Explanation / Answer

Bank of American provides two types of loan, fixed interest rate loan and variable interest rate loan.

Fixed interest rate loan of Bank of America

In fixed interest rate loan the interest rate of the loan remains the same throughout the loan period. The amount of rate of return in fixed rate loan remains the same.

Variable interest rate loan of Bank of America

In variable interest rate loan the interest rate of the loan remains variable. It changes over a period of time. In variable interest rate loan the rate of return changes as per the Bank of America policy.

The essential documents are also required by the Bank of America from Carl and Christy. These documents are necessary as per the financial law of United States of America. The documents are as follows:

Identity Proof

Address Proof

Income Proof

Bank Account Proof, etc.

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