A department store has it’s own credit card facilities, for which it charges interest at a rate of 4% each month. Calculate the annual percentage rate (APR). Explain why this is not the same as charging an annual interest rate of 48% and what is APR. b) A proposed investment costs $1500 today. The expected revenue flow is $ 3000 at the end of year 1, and $10,000 at the end of year 2. Find the internal rate of return, correct to two decimal places. The market interest rate is 15%. Would you recommend this investment? Explain the reason for your recommendation.
A department store has it’s own credit card facilities, for which it charges interest at a rate of 4% each month. Calculate the annual percentage rate (APR). Explain why this is not the same as charging an annual interest rate of 48% and what is APR. b) A proposed investment costs $1500 today. The expected revenue flow is $ 3000 at the end of year 1, and $10,000 at the end of year 2. Find the internal rate of return, correct to two decimal places. The market interest rate is 15%. Would you recommend this investment? Explain the reason for your recommendation.
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter22: Providing And Obtaining Credit
Section: Chapter Questions
Problem 3P: Del Hawley, owner of Hawleys Hardware, is negotiating with First City Bank for a 1-year loan of...
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A department store has it’s own credit card facilities, for which it charges interest at a rate
of 4% each month. Calculate the annual percentage rate (APR). Explain why this is not the
same as charging an annual interest rate of 48% and what is APR.
b) A proposed investment costs $1500 today. The expected revenue flow is $ 3000 at the
end of year 1, and $10,000 at the end of year 2. Find the
two decimal places. The market interest rate is 15%. Would you recommend this
investment? Explain the reason for your recommendation.
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