A store will give a 2.5% disount on the cost of purchase if you pay cash today. The payment is due in 1 month. What is the implicit borrowing rate for clients that defer their payment for 1 month? The effective annual rate? Discouunt 0.015 Months 12 Quarterly Rate 0.00125 Effective Annual interest rate 19.56% 1+0.015^12-1=wrong. how do I calculate the effective annual rate correctly?
A store will give a 2.5% disount on the cost of purchase if you pay cash today. The payment is due in 1 month. What is the implicit borrowing rate for clients that defer their payment for 1 month? The effective annual rate? Discouunt 0.015 Months 12 Quarterly Rate 0.00125 Effective Annual interest rate 19.56% 1+0.015^12-1=wrong. how do I calculate the effective annual rate correctly?
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter21: Supply Chains And Working Capital Management
Section: Chapter Questions
Problem 10MC
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A store will give a 2.5% disount on the cost of purchase if you pay cash today. The payment is due in 1 month. What is the implicit borrowing rate for clients that defer their payment for 1 month? The effective annual rate?
Discouunt | 0.015 |
Months | 12 |
Quarterly Rate | 0.00125 |
Effective Annual interest rate | 19.56% |
1+0.015^12-1=wrong. how do I calculate the effective annual rate correctly?
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