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a. The financial institution's monthly loan interest rate, b. The annual real profit rate of the financial institution, c. The investor's annual compound discount (profit) rate,

a. The financial institution's monthly loan interest rate, b. The annual real profit rate of the financial institution, c. The investor's annual compound discount (profit) rate,

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 17P
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1.) A financial institution offers a 6-month compound interest rate of 7.2% per month. (The interest rate applied to a customer who deposits his money in the bank). This institution provides capital to investors with an annual loan interest rate of 22%. An investor who receives a loan from this institution wants to invest, expecting a real annual profit of 10%. Since the inflation rate is 14.6% annually; a. The financial institution's monthly loan interest rate, b. The annual real profit rate of the financial institution, c. The investor's annual compound discount (profit) rate, d. Calculate the annual real profit rate of the depositor. (NOTE: All interests that do not write "real" are compound interest.)
Transcribed Image Text:1.) A financial institution offers a 6-month compound interest rate of 7.2% per month. (The interest rate applied to a customer who deposits his money in the bank). This institution provides capital to investors with an annual loan interest rate of 22%. An investor who receives a loan from this institution wants to invest, expecting a real annual profit of 10%. Since the inflation rate is 14.6% annually; a. The financial institution's monthly loan interest rate, b. The annual real profit rate of the financial institution, c. The investor's annual compound discount (profit) rate, d. Calculate the annual real profit rate of the depositor. (NOTE: All interests that do not write "real" are compound interest.)
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