A short-term loan of £5,000 is repayable in 25 days at a simple rate of interest of 6% p.a. Assuming that 1 year is equivalent to exactly 365 days, calculate the following: (i) The amount of interest, to the nearest £0.01, accrued on the loan in 25 days; (ii) (iii) The annual effective rate of discount equivalent to this transaction, to the nearest 0.01%; The annual nominal rate of discount convertible monthly equivalent to this transaction, to the nearest 0.01%.

A short-term loan of £5,000 is repayable in 25 days at a simple rate of interest of 6% p.a. Assuming that 1 year is equivalent to exactly 365 days, calculate the following: (i) The amount of interest, to the nearest £0.01, accrued on the loan in 25 days; (ii) (iii) The annual effective rate of discount equivalent to this transaction, to the nearest 0.01%; The annual nominal rate of discount convertible monthly equivalent to this transaction, to the nearest 0.01%.

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter7: Using Consumer Loans

Section: Chapter Questions

Problem 7FPE: Calculating interest and APR of installment loan. Assuming that interest is the only finance charge,...

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